1. What is Home Loan Amortization?

Amortization is the process of spreading out a loan into fixed payments over time. In the Philippines, home loans typically have terms of 5 to 30 years, with monthly payments consisting of both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard amortization formula:

Where:

• \( PMT \) — Monthly payment
• \( P \) — Principal loan amount (PHP)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in years × 12)

Explanation: The formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest.

3. Importance of Amortization Calculation

Details: Understanding your amortization schedule helps with financial planning, shows how much interest you'll pay over the loan term, and reveals how much principal you're building with each payment.

4. Using the Calculator

Tips: Enter the principal amount in PHP, annual interest rate (common rates in Philippines are 5-10%), and loan term in years (typically 5-30 years for home loans).

5. Frequently Asked Questions (FAQ)

Q1: What are typical home loan terms in the Philippines?
A: Most banks offer 5-30 year terms, with 20-25 years being common for first-time home buyers.

Q2: How does interest rate affect my payments?
A: Higher rates significantly increase total interest paid. A 1% difference can mean hundreds of thousands PHP over a 20-year loan.

Q3: Are there prepayment penalties in the Philippines?
A: Some banks charge prepayment penalties, especially in early years. Check your loan terms.

Q4: What other fees should I consider?
A: Philippine home loans often include processing fees, documentary stamps, notarial fees, and fire insurance.

Q5: Can I get a fixed-rate loan in the Philippines?
A: Most banks offer fixed rates for 1-5 years initially, then shift to variable rates. Some offer fully fixed terms at higher rates.