Mortgages - Interest/capital Formula

[johnny37]

When repaying a mortgage the first few years payments are mainly interest. It follows that at some time the monthly payment is repaying mainly (or all) capital. The monthly payment remains the same throughout. Is there a formula for working out the proportion of interest to capital within the monthly payment?

[factor-fiction]

There may be a simpler version than this
http://www.haresoftware.com/xlent_udf_repaymentmortgage.htm

[Peter Pedant]

Yes there is
This is or would be a maths A level question
so I would repost in 'Science' where a few math teachers lurk and would be able to explain well. [ Jiim or FF may rise to the occasion ]

As for an off the shelf formula - No but it is easily derivable

AS a math teaching question - could be interesting....
real life to engender interest
starts off as stair-casey and smooths to an exponential
is the half and half point of any interest ( no I dont think so....)
Do all exponentials look the same (yes)

[Peter Pedant]

Oh, there you are !

mention FF or Jim and up they pop !

[factor-fiction]

This saves you setting up your own spreadsheet- just plug the numbers in for the loan amount, interest rate and mortgage length and press cALCULATE

[factor-fiction]

Oops- here is the calculator that gives a month by month breakdown
http://www.nationalmortgagebroker.co.uk/calculators/mortgage-principal-calculator.php

[factor-fiction]

Morning PP

johnny- you also need to tick the box that says "show schedule table". It seems to work although I haven't checked the maths.

[Old_Geezer]

It seems not too difficult to do in a spreadsheet because each month the interest is easily calculable from the remaining capital owed, the rest of the payment is reducing that capital.

What complicates things if you want a single equation for the whole period is that the interest rate can change over time. Or you could make an extra payment. So I expect you can only apply it to a snapshot in time anyway.

[Old_Geezer]

Just to add there are quite a few mortgage related sites out there. Many should have something similar to what you ask for.

[johnny37]

My reason for asking is my son cannot remortgage. I wont bore you with the reason. He has been advised to sit tight for a few more years to, in theory, increase his equity. he has had the loan since 2007, but needs to know when the capital repayments become worthwhile. Thks for the formula, FF. I will take a look at it. My s-in-l is a maths teacher!