# Formula for calculating the mortgage repayment?

Could some one give me the formula for calulating the mortgage repayment figure. Consider the following example for calulation.

Suppose the Principal is $ 250,000 ( borrowed money )

Interest is 8.00%

Time for loan repayment is 20 years

Frequency of repayment is monthly

So what will be the repayment amount = …………/ month????

I know now a days with the help of software I can just put the above figure in the respective columns and I will get the result within a second but I want to know the calculating formula so that I can calculate myself.

Thanks for your answer in advance.

I am researching the topic for a project at school. I thought with the dawning of the computer age, repayment of the loan would be feasible via the internet. But is the process legal? And would any Japanese bank agree to it?

I use this calculator: http://ray.met.fsu.edu/~bret/amortize.html

You can use it on any loan/credit card you are paying back. You can also see the amortization table to see how much is going towards principle & interest.

Answer from the above calculator is: 2091.10/month

I have been a loan officer for many years now, yet never found the formula, I think it’s a little more complicated than you think. what I personally use is spreadsheets. This is the formula you put into Excell to get the payment:

=PMT(8%/12,240,250000,0,0)

where 8%/12 – is monthly interest

240 -number of months to repay

250000 – present balance

0 – future balance

0 – type of loan (this can be ommited, I think it only matters for some type of Canadian loans)

It returns negative value for payment as 2091.10

Payments are always negative values on Excell, so you can add a minus sign to reverse it

-=PMT(8%/12,240,250000,0,0)

((interest rate/100)/12) * Amount borrowed) / (1-((interest rate/100)/12))(-number of monthly payments)

it’s P = principal value

i = interest annual

T = time in years

M = monthly payment

M = (P) * [ { ( i ) / (12*100) } / { 1 – ( 1 + ( i ) / (12*100)) ^ (-12 * T) } ]…

hope it helps…

It would be perfectly legal if you can find a bank willing to do it. However, banks usually like to lend only in areas where they are already doing business, so that they can keep abreast of the market, and also so that if the loan goes sour they have somebody nearby to work on the problem. Check the yellow pages in your area for banks with Japanese names.

You can borrow money from whomever you want to. Now you just have to find someone to lend it. Generally speaking banks like to loan money for properties they are close to because they can make sure there is no scam. Of course they send in appraisers but they have to have some in the local area that they trust. If it is large enough, things are pretty much borderless. Money flows where it is needed most. For this reason large scale commercial loans would be easier.