So, we have to calculate that last payment based on the interest for the last month and the remaining principal. It turns out that we cannot use the built-in PMT function for the last payment because it will be a different amount. Because we are going to add extra payments, we want to be sure that we don’t overpay the mortgage.īefore we can calculate the interest and principal we must calculate the payment. Monthly Principal Payment = Full Payment Amount - Monthly Interest Paymentįor example if we have the payment amount in B13, then we can calculate the first interest payment in cell C13 as: $B$4/$B$5*F12, and the first principal payment in D14 as: B13-C13. Monthly Interest Payment = Monthly Rate x Remaining PrincipalĪnd the principal portion of the payment is: The interest payment must always be calculated first, and it is simply the per period (here monthly) interest rate times the remaining principal: Here is a screenshot that shows the beginning portion of our spreadsheet:Ĭalculating the Interest, Principal, and Full Payment Amountīecause we can’t use the built-in functions, we will have to do the math. Note that in this tutorial I assume that you will make the same extra payment each month, and that it will start with the first payment. I have set it to $300 per month, but you can change that. You will also notice that I have entered the extra principal that will be paid into B7. This is just in case you may want to amortize something that has other than monthly payments. Note that I have entered the payments per year in B5. In B6 I have calculated the normal mortgage payment using the PMT function:Īs always, I have adjusted the interest rate and number of payments to a monthly basis. We have a $200,000 mortgage for 30 years with monthly payments at a 6.75% APR. Note that we have all of the information that we need in the upper-left corner of the spreadsheet. However, the basic idea is the same with the exception that we can no longer use Excel’s built-in IPmt and PPmt functions. Obviously, there will need to be some changes, and we will add some new features. We will use the same basic layout and numbers here. If you haven’t yet read the previous tutorial, I suggest that you do it now. Don’t ask them, just do it and see what happens. In fact, I have refinanced my mortgage several times over the years and every mortgage servicer has done this. I have done this for years, and the mortgage statement always shows the extra principal payment even though I have done nothing more than pay extra – there is no need for a separate check or the mortgage company’s approval. Their software will automatically apply any extra amount to the remaining principal. They will often try to get you to sign up and pay for a program that allows you to pay extra principal, but this is not necessary. In this tutorial we will add this feature.īefore we get started let me mention one important thing: You can almost always (actually as far as I know it is always) just go ahead and add more money to the check that you send to the mortgage servicing company. In the original amortization schedule tutorial I left out a feature that is of interest to a lot of people: adding extra principal payments in order to pay off the loan earlier than the loan contract calls for. To learn more about relationship-based ads, online behavioral advertising and our privacy practices, please review Bank of America Online Privacy Notice and our Online Privacy FAQs.Are you a student? Did you know that Amazon is offering 6 months of Amazon Prime - free two-day shipping, free movies, and other benefits - to students? Click here to learn more These ads are based on your specific account relationships with us. In addition, financial advisors/Client Managers may continue to use information collected online to provide product and service information in accordance with account agreements.Īlso, if you opt out of online behavioral advertising, you may still see ads when you log in to your account, for example through Online Banking or MyMerrill. If you opt out, though, you may still receive generic advertising. If you prefer that we do not use this information, you may opt out of online behavioral advertising. This information may be used to deliver advertising on our Sites and offline (for example, by phone, email and direct mail) that's customized to meet specific interests you may have. Here's how it works: We gather information about your online activities, such as the searches you conduct on our Sites and the pages you visit. Relationship-based ads and online behavioral advertising help us do that. We strive to provide you with information about products and services you might find interesting and useful.
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