What is a Mortgage Calculator?
A mortgage calculator is a helpful tool for estimating your monthly home loan payments. By entering your loan amount, annual interest rate, and term (in years and months), you can instantly determine how much you’ll need to pay each month. It helps you plan your budget, compare different loan options, and avoid surprises when buying a house or investing in property.
Mortgage Formula
The formula to calculate monthly payments is:
M = P × r × (1 + r)n / [(1 + r)n − 1]
- M = Monthly payment
- P = Loan principal
- r = Monthly interest rate (annual rate ÷ 12)
- n = Number of months
Example
If you borrow $200,000 at an interest rate of 4% for 25 years and 6 months, your total loan duration is 306 months. Using the formula, your monthly mortgage payment would be approximately $1,072.32.
Benefits
- Easy planning for new home buyers
- Quick comparison of different loan durations or rates
- Understand the true cost of borrowing