1. What is the Home Loan Payment Formula?

The home loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard calculation used by Malaysian banks like CIMB and Maybank for home loans.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

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

Explanation: The formula accounts for both principal and interest payments over the loan term, with more interest paid earlier in the loan period.

3. Importance of Loan Calculation

Details: Accurate loan calculations help borrowers understand their financial commitments, compare loan offers, and plan their budgets effectively.

4. Using the Calculator

Tips: Enter the principal amount in MYR, annual interest rate (e.g., 3.5 for 3.5%), and loan term in years. The calculator will show monthly payment, total repayment, and total interest.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between fixed and variable rate loans?
A: Fixed rates remain constant throughout the loan term, while variable rates may change based on market conditions.

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest.

Q3: What other costs should I consider?
A: Remember to account for processing fees, stamp duty, legal fees, and mortgage insurance if applicable.

Q4: Can I make extra payments?
A: Many banks allow extra payments which can reduce total interest. Check for prepayment penalties.

Q5: How accurate is this calculator?
A: This provides a good estimate, but actual bank calculations may include additional factors or rounding methods.