How to determine the monthly mortgage payment

Mortgage Calculator 2021

Updated on by Stefan Banse

Loan calculator

Free loan calculator ✔ Installment ✔ Interest ✔ Repayment plan ✔ With the loan calculator, you can optionally calculate the installment amount, term or initial repayment, taking into account the fixed interest period, discount and special repayments.

With the mortgage calculator you can calculate all the key data for your mortgage loan to finance your property online. Select a borrowing rate and your preferred term or rate. Enter planned special repayments and a fixed interest period. The mortgage calculator calculates all costs, prints out the initial repayment, the effective interest rate and a repayment schedule. Using the charts calculated by the mortgage calculator on the interest and repayment components as well as the development of the residual debt of your mortgage loan, you will get a quick overview of other key loan data. Now enter the required or desired data for your loan. The mortgage calculator calculates all the important parameters relating to your mortgage loan.

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Example mortgage calculation

Basic information on the term "mortgage loan"

Mortgage loans are loans that are secured by liens on at least one property. Such a mortgage, which is used as a charge on a piece of land as collateral for a loan, is called a mortgage (old Greek "pledge").

The term mortgage loan is colloquially a simplification, since other mortgages, such as land charge or security land charge, may be used as loan security.

The most important terms relating to the mortgage calculator

mortgage

A mortgage in the strict sense of the word is a lien on financing. The debtor will only receive the desired loan paid out if he leaves a pledge. In real estate financing, the property and the building itself are the pledge and must be deposited as security. Usually the mortgage is also entered in the land register of the property. However, 100 percent of the construction cost cannot be secured; mortgages of 80 percent of the market value are common. If the debtor defaults on repayment, the loan can be terminated and the security realized. Usually there is then a foreclosure auction, the proceeds of which are used to pay off the debts.

Mortgage loan

Loans that require a mortgage (i.e. a lien on the property) to be taken out as security are mortgage loans. The financial experts differentiate between three variants: the fixed-rate mortgage, the variable mortgage and the LIBOR mortgage. Fixed-rate mortgages usually run for one to ten years, during which a fixed interest rate has to be paid. With variable mortgage loans, the interest rate can be adjusted to changing interest rates. LIBOR mortgages are loans linked to reference interest rates with a short term of just 6 months.

Mortgage rates

Mortgage loan rates are called mortgage rates. Due to the excellent security of the loan through the mortgage, the offers of the banks and credit institutions are very cheap. Fixed-rate mortgages with their short term have the lowest interest rates. Mortgage rates for variable mortgages are based on the current level of interest rates - borrowers benefit from the current lull, but must expect interest rates to rise at all times. As a result, the installments are often different for the due interest and repayment dates. That makes financial planning more difficult.

Repayment

Loans are repaid in partial steps. These payments are also called repayment.

Installment amount

When it comes to repaying the loan, the experts distinguish between two variants. With the first, the repayments are the same. In addition, there is interest calculated to the day on the loan amount. Due to the lower liability, the rate decreases with each payment date. This form of loan is typical for installment loans. With the second option, the bank demands a consistently high rate. It contains a repayment and interest component. With the falling residual debt, the interest decreases, the repayment portion increases with each installment. Such loans are called annuity loans.

Repayment schedule

Banks and credit institutions list all payments due in a repayment schedule. In addition to the installment, it also contains the amount of the repayment and the interest. The remaining debt is also shown. However, for loans with a fixed interest period, the repayment schedule is limited to this period. Each special repayment leads to a reduction in the term of the loan and a change in the interest amount, so debtors should then request a new repayment schedule.

Debit interest

Interest represents the remuneration for the use of the loan. The interest rate shown in the loan agreement is valid for one year. The term borrowing interest is used for interest on liabilities of the debtor. Interest on credit is then called credit interest - these terms go back to the bank's balance sheet. Debit interest is always calculated precisely to the day on the remaining debt of a loan. The due date of the interest depends on the contract - it can be collected monthly, quarterly or annually.

Land charge

Many debtors equate the land charge registered in the property register with a mortgage, but there are small differences. Both the land charge and the mortgage serve as security for a long-term home loan. A mortgage is always tied to a specific loan. It is reduced with each repayment. When the repayment has ended, the mortgage is deleted from the land register. A land charge, on the other hand, is treated independently of the loan amount. It remains in the land register even after the loan has been repaid; deletion must be requested. If, after a certain repayment phase, external funds have to be borrowed again, for example because an old building is to be renovated, the "free" funds from the land charge can be used again. This saves costs for registering the land charge and also time.

Remaining balance of the loan

The amount of the liabilities within a financing on a certain key date is called the residual debt. It forms the basis for calculating the interest on a due date.

Initial repayment

Even with a mortgage loan, the repayment rate that has to be paid in the first installment can be set individually. Whoever has the adjustment of the initial repayment written in the contract remains flexible. In this way, the term of the loan can be shortened later, but the monthly burden can also be reduced in the event of payment difficulties.

Full repayment

Loans with full repayment are repaid in full within the agreed term. This means that repayment installments are easy to calculate and the interest rates are often fixed.

Building money

The term building money is usually summarized as the amount that has to be made available for the construction, renovation or conversion of a property. This includes equity and funds from outside financing. However, building money is also a legal term from the law for securing building claims. Here building money refers to the amount that the recipient receives from a third party.

Example of mortgage calculation

The Fischer couple would like to take out a mortgage loan of 400,000 euros to finance a property.

The Fischers want to pay the lowest possible monthly installment to repay the mortgage loan, which is why they enter a relatively long desired term of 30 years in the mortgage calculator. The calculator can use the loan amount, debit interest and desired term to calculate the same rate over the entire term.

Mortgage Loan Terms

  • EUR 400,000 mortgage loan amount
  • 1.5 percent debit rate
  • 30 year term
  • 15 year fixed interest period for the mortgage loan

The Fischers now want to use the mortgage calculator to calculate the monthly rate for the mortgage loan, the total cost of the loan and the remaining debt after the planned fixed interest period of 15 years.

1. First mortgage installment: Calculate the interest component with the mortgage calculator

The fixed monthly installment to be calculated is always composed of an interest component that depends on the remaining debt and a repayment component. At the beginning of the mortgage repayment, the remaining debt is 400,000 euros.

Interest portion of the first installment

With a borrowing rate of 1.5 percent per year, the interest component of the first monthly installment is one twelfth of 6,000 euros (6,000 euros = 1.5 percent of 400,000 euros).

=> EUR 500.00 interest component

2. Calculation of the mortgage rate based on the specified term

The mortgage calculator uses a presumed rate to calculate the mortgage loan for the desired term of 30 years. He uses the knowledge of the respective interest portion of the installment, because this was calculated for the first installment under 1. at 500.00 euros and can always be recalculated for the subsequent installments using the remaining debt. The mortgage calculator then corrects the rate to be calculated using interval nesting until the remaining debt is exactly 0 at the end of the desired term.

Calculated repayment schedule at the end of the 30-year term
monthRemaining debt from the previous monthrateInterest portionRepayment portion
357............
3584.131,11 1.380,48 5,161.375,32
3592.755,79 1.380,483,441.377,04
3601.378,751.380,481,721.378,76
3610,00
Monthly mortgage rate for the Fischer family

The monthly installment for the mortgage loan is EUR 1,380.48 with a term of 30 years according to the above installment plan

3. Calculate the initial repayment with the mortgage calculator

In the case of mortgage loans, the initial repayment is usually also given as a percentage per year. The permanently constant rate for mortgage loans on an annuity basis is made up of a falling interest rate over the course of the loan and a repayment portion that increases to the same extent. The initial repayment corresponds to the repayment portion of the first installment based on the first year of the mortgage term in percent per year. Thus, a mortgage loan will be repaid faster with a high initial repayment than with a low initial repayment.

For Fischer family loans, the mortgage calculator calculates the initial repayment as follows:

Initial repayment
  • The repayment portion of the first installment from the Fischer family is exactly 880.48 euros with an installment amount of 1,380.48 euros (see calculation under point 2) minus the first interest portion of 500 euros (see calculation under point 1).
  • Extrapolated to the year, these are 12 × 880.48 euros = 10,565.076 euros
  • 10,565.76 euros make up 2.641 percent of the total loan amount of 400,000 euros

The initial repayment on Fischer's family mortgage loan is 2.641 percent

4. Calculate the total interest with the mortgage calculator

The sum of all interest components from the installment payments and possibly the discount, which is deducted as "advance interest" at the beginning of the mortgage financing, corresponds to the total interest. The Fischer family has not agreed a discount, so the total interest corresponds to the sum of the interest components of all installment payments.

Total interest for the Fischer family

The total interest on the mortgage loan is 96,973.10 euros

5. Calculate the total expense with the mortgage calculator

The total of all payments to be made to repay the mortgage loan is the total cost of the mortgage loan. The total expense is made up of interest, any discount and all repayments.

Total expenditure for the Fischer family

The total cost of paying the mortgage loan is
400,000 € repayment + 96,973.10 € interest = 496,973.10 €.

6. Calculation of the remaining debt following the fixed interest period with the mortgage calculator

The Fischer family would like to calculate the remaining debt on their mortgage loan after the 15-year fixed interest period. Based on this remaining debt, the Fischers can estimate the costs of a follow-up financing with the likely future interest rate. The repayment schedule calculated and printable by the mortgage calculator shows the amount of the remaining debt after 180 months.

Repayment schedule at the end of the fixed interest period
monthRemaining debt from the previous monthrateInterest portionRepayment portion
178............
179224.592,54 1.380,48280,741.099,74
180223.492,801.380,48279,371.101,11
181222.391,68.........
The remaining debt after the 15-year fixed interest period is EUR 222,391.68

7. Calculate the effective interest rate with the mortgage calculator

To calculate the effective annual interest, all costs and payments such as special repayments, discounts and installments are entered at the respective times. The APR is calculated using the internal rate of return (IRR). All mortgage loan providers are required to include the APR on their mortgage offers so that consumers can compare the various mortgage loan offers. The mortgage calculator calculates the effective interest rate using an iterative calculation method.

Effective interest rate for the Fischer family

The effective interest rate on the Fischer family mortgage loan is 1.510 percent

8. Generation of the entire repayment schedule by the mortgage calculator

The mortgage calculator also generates the amortization schedule for the Fischer family mortgage loan. The repayment plan provides information about all installment payments, the respective remaining debt at the time of the installment payment, as well as the respective repayment and interest components of all financing installments. The Fischer family can view the plan using the corresponding info button in the computer result and print it out using the print button in the repayment plan window.

Tip: Compare Top Loans Below 1%

Last update on April 10th, 2021

The pages of the "Credit" world were last editorially checked on April 10th, 2021 by Stefan Banse. They are all up to date.

Previous changes on 08/27/2020

  • 08/27/2020: Integration of a debt rescheduling calculator
  • October 1st, 2018: Pictures have been added to the help texts
  • June 20, 2018: Publication of our new calculator for calculating credits or loans and construction financing as well as creating all texts on the topic
  • Editorial revision of all texts in this subject area