Let's assume we have taken a mortgage (loan) on our house and we have a monthly payment that changes yearly at a specified rate (say 2.5%). The loan itself is to be repaid @5.24% reducing balance.
How do we find out the interest component monthly, the number of years to pay back the loan, the impact of prepayment of a portion of the loan on the tenure of the loan?
Let's say the loan amount is 342,500 and monthly payment is 1,836. And this monthly payment changes only because of the indexation @2.5%. Which means that for the 1st 12 months it is 1836/month and for the next 12 months it becomes 1,836*1.025=1,892/month and so on.
Here is the link to a spreadsheet which shows the estimates for the questions asked.
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