1. What is the Home Loan Repayment Formula?

The home loan repayment formula calculates the fixed periodic payment amount required to fully repay a loan over its term, including both principal and interest. This is known as the PMT (payment) formula in financial mathematics.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

• \( P \) — Principal loan amount ($)
• \( r \) — Periodic interest rate (annual rate divided by number of periods per year)
• \( n \) — Total number of payments (years × payments per year)

Explanation: The formula calculates the fixed payment needed to pay off the loan over its term, accounting for compound interest.

3. Importance of Loan Repayment Calculation

Details: Understanding your loan payments helps with budgeting, comparing loan offers, and planning your financial future. It shows how much interest you'll pay over the life of the loan.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, loan term in years, and payment frequency. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between principal and interest?
A: Principal is the amount borrowed. Interest is the cost of borrowing that money, calculated as a percentage of the principal.

Q2: How does payment frequency affect total interest?
A: More frequent payments (e.g., weekly vs. monthly) can reduce total interest paid and shorten the loan term.

Q3: What is amortization?
A: The process of paying off a loan over time through regular payments that cover both principal and interest.

Q4: How can I pay less interest overall?
A: Make larger payments when possible, choose a shorter loan term, or refinance to a lower interest rate.

Q5: Does this calculator account for variable rates?
A: No, this calculates payments for fixed-rate loans only. Variable rate loans would require different calculations.