I state this calculation is rough because usually there are additional calculation or penalties applied to your extra payments based on your initial loan aggreement. The result will give you a rough calculation about how much your interest can be saved on how long your loan period can be shortened. You can also plan to make extra payment regularly whether paying it monthly, quarterly, semi-annually or annually. Instead of thinking about making additional payment, you can use this calculator to calculate the impact of your extra payment to your existing loan or mortgage. In loan terms, it is called extra payment. And usually you think about this after you gain some profit in your investment, your salary is raised, or probably you won some lotteries. We can visualize the impact with a nice chart (requires some extra work) like this:ĭo check the download workbook for details on how the chart is setup.If you have a loan or mortgage, probably you have ever think about paying more money on top of your monthly payment to lower the amount of the total interest paid, as well as shorten the payment period over the life of the loan. Go ahead and play with the table by typing some values in the “Extra payment” column. Step 3: Your mortgage will end when the “Eff. Closing Balance is opening balance minus principal paid minus extra payment.Ĭomplete this table with necessary formulas and fill everything down.Extra Payment is the input column where we can type any extra payments.We can get this with the PPMT() function. Principal Paid is the amount of principal paid in each month.=ROUND(NPER($E$7/12,$E$10,$D13),0) will tell us how many months it is rounded. We can use NPER function to get the answer here. Effective term is how long it would take you to pay off the mortgage based on the opening balance, and agreed upon monthly payment (calculated in Step 1) and interest rate (Cell E7).For subsequent months, this will same as previous month’s closing balance.
Opening Balance is same as loan amount for month=1.Related: Read about SEQUENCE and other Dynamic Array functions in Excel. You can use =SEQUENCE(360) to automatically generate all the months. So, set up a range of 360 months (or longer if you want to cater for longer mortgages). In my case, let’s say loan is $500,000, term is 20 years and APR (Interest rate) is 5.35% per annum.Īs extra payment will bring down the outstanding loan term, we need to set up an amortization table to see the impact clearly. Step 1: Calculate the monthly (or weekly / fortnightly) payment:Īssuming you have the Loan amount, term & APR in three cells E5, E6 & E7, we can use the PMT() function to calculate the periodic payment.
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