1. What is Home Loan Amortization?

Home loan amortization is the process of paying off a mortgage loan over time through regular payments. In the Philippines, this typically involves fixed monthly payments that cover both principal and interest.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

Where:

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

Explanation: The formula calculates the fixed monthly payment required to fully repay a loan over its term, accounting for compound interest.

3. Importance of Amortization Calculation

Details: Understanding your amortization schedule helps you budget for home ownership, compare loan offers, and plan for prepayment strategies to save on interest.

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).

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 years being common. Interest rates typically range from 5-10% annually.

Q2: Are there other fees not included in this calculation?
A: Yes, Philippine home loans often include processing fees, insurance, and other charges that aren't reflected in the amortization calculation.

Q3: How does loan term affect total payment?
A: Longer terms reduce monthly payments but increase total interest paid. A 20-year loan at 6% pays about 72% of principal in interest over the term.

Q4: Can I prepay my loan in the Philippines?
A: Most Philippine banks allow prepayment, often with certain conditions or fees. Prepayment can significantly reduce total interest.

Q5: Are interest rates fixed or variable?
A: Both options exist. Fixed rates are typically 1-3% higher than initial variable rates but provide payment stability.