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Loans: compare different types of repayment schemes
Financial - Wealth
Friday, 25 August 2006 22:26

This module computes one of the following given the other loan/mortgage parameters:

  1. maximum loan: amount excluding costs,
  2. interest,
  3. term amount,
  4. remaining debt,
  5. number of terms.

The parameters are calculated using the costs as well. Three results are computed, one for linear loans, one for annuity loans and one for interest-only loans.

With a linear loan we mean that at every term the same amount is payed back. On top of that interest is paid at the beginning or end of every term. Because the remaining debt decreases after each term the amount of interest to be paid becomes smaller at the end of the loan period. So the amounts for the first terms are higher than the amounts for the last terms.

For annuity loans a constant amount is payed at each term. In the beginning of the loan this amount usually mainly consists of interest. Later on the amounts payed at each term contain less interest and the remaining debt decreases faster over the terms.

For an interest-only loan only interest will be paid at each term. At the end of the last term the remaining debt is the original amount plus the transaction costs. The computed monthly amount is equal to the interest part of the first term of a linear loan. For a large number of terms the same is aproximately true for the interest part of the first terms of an annuity loan.

Leave the parameter that you want to calculate empty in the form below. See the mortgage example for a demonstration of the use of this calculator.

Original principal balance ($):
Nominal Interest rate (%):
Periodic repayments ($):
per
Number of periods:
Remaining debt ($):
Time periodic repayments:
Costs in advance:
.
Results:
Linear loan:
 
Annuity loan:
Interest-Only loan: