Purpose of a Mortgage Calculator

1. To estimate monthly mortgage payments.

2. To determine how different factors like loan amount, interest rate, loan term, and down payment affect the cost of a mortgage.

3. To provide a breakdown of payments, including principal, interest, taxes, and insurance (PITI).

4. To help users understand the total cost of the loan, including interest over the entire loan term.

Key Inputs for a Mortgage Calculator

1. Loan Amount: The total amount borrowed (home price minus down payment).

2. Interest Rate: The annual interest rate charged by the lender.

3. Loan Term: The repayment period (e.g., 15, 20, or 30 years).

4. Down Payment: The initial amount paid upfront, typically expressed as a percentage of the home price.

5. Property Taxes (optional): Annual property tax amounts.

6. Homeowner’s Insurance (optional): Insurance costs to protect the property.

7. PMI (Private Mortgage Insurance) (optional): For loans with low down payments, lenders may require PMI.

Mortgage Calculator Formula

Here's the formula to calculate EMI:

Where,

E = EMI

P = Principal Amount

R = Rate of interest. This is calculated on a monthly basis. If the interest rate is 4% per annum then R will be 4/12/100 = 0.0033.

N = Duration in months

Example of Mortgage Calculation

Let’s say you borrow ₹10,00,000 at an annual interest rate of 10% for 5 years:

Loan Amount (P): ₹10,00,000

Annual Interest Rate: 10%

Monthly interest rate R=10/12/100=0.00833

Loan Tenure (N):5×12=60 months

The EMI would be approximately ₹21,247.96 per month.

How It Helps

An Mortgage Calculator is an essential financial tool that simplifies loan repayment planning, ensures better budgeting, and makes it easier for borrowers to evaluate loan offers.