# mortgage calculation formula

Pushing [COMP][PMT] will return -639.81.

Remember, these calculations are for the mortgage itself, and do not include any life insurance premiums added to the payment or property taxes that may get added. Also, some lenders will round up the payment to the next dollar. This simply means that the mortgage gets paid down slightly faster, since those extra pennies are applied to principal.

### Some Mortgage Calculators – Excel files

Monthly Payment Mortgage Calculator – No Amortization Table This spreadsheet file allows you to compare up to five mortgages – different rates, principals, amortization terms, etc.

Monthly Payment Mortgage Calculator – With Amortization Table This spreadsheet file calculates the payment given the principal, amortization term and nominal or quoted rate and computes the amortiztion table for five years. You can get a longer amortization table by simply copying the last line as many times as necessary. You can also study the impact of making extra payments on any monthly payment date.

Weekly Payment Mortgage Calculator – With Amortization Table This spreadsheet file calculates the payment given the principal, amortization term and nominal or quoted rate and computes the amortiztion table for 261 weeks (five years). You can get a longer amortization table by simply copying the last line as many times as necessary. You can also study the impact of making extra payments on any weekly payment date. Note that the assumption is that this is the typical weekly-pay mortgage with the payment based on one-quarter the monthly payment on the nominal amortization. The actual amortiztion term is provided as well.

### Extra Payments

What is the impact of an extra, lump-sum payment? Every penny of an extra payment will reduce your principal outstanding and start saving you interest immediately. The spreadsheets above that have amortization tables allow you you determine the impact of lump-sum extra payments made on any payment date.

Let’s extend the example that we used above. Suppose one year after taking out the \$100,000, 6%, 5-year mortgage, you received an unexpected \$2000 windfall and decided to apply half of this to your mortgage. Without the extra payment, you would be owing \$89,836.47 at renewal after five years. With the extra payment this is reduced by \$1,266.76 to \$88,569.71. It should not surprise to you to learn that this is a 6.09% compound annual return on your \$1000, since that is the effective annual rate on the mortgage. This 6.09% is tax-free, which is roughly equivalent to a 9.5-10% rate of return on a pre-tax basis for people earning interest outside an RRSP or other tax-sheilding vehicle. That is excellent, considering that it is close to a risk-free return.