Mortgage Balance Calculator

Mortgage Balance Formula:

\[ B = P \times \frac{(1 + r)^n - (1 + r)^p}{(1 + r)^n - 1} \]

Principal (P):

Interest Rate (r):

decimal

Loan Term (n):

months

Months Paid (p):

months

Remaining Balance (B):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Mortgage Balance Formula?

The mortgage balance formula calculates the remaining balance on a loan after a certain number of payments have been made. It takes into account the principal amount, interest rate, total loan term, and number of payments made.

2. How Does the Calculator Work?

The calculator uses the mortgage balance equation:

\[ B = P \times \frac{(1 + r)^n - (1 + r)^p}{(1 + r)^n - 1} \]

Where:

\( B \) — Remaining balance
\( P \) — Original principal amount
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (loan term in months)
\( p \) — Number of payments already made

Explanation: The formula accounts for both the principal and interest portions of each payment, showing how the balance decreases over time.

3. Importance of Mortgage Balance Calculation

Details: Knowing your remaining mortgage balance helps with financial planning, refinancing decisions, and understanding home equity. It's essential when considering selling or refinancing your home.

4. Using the Calculator

Tips: Enter the original loan amount, monthly interest rate (as a decimal), total loan term in months, and number of payments already made. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly?
A: Divide the annual percentage rate by 12 (months) and 100 (to convert from percentage to decimal).

Q2: Does this work for all loan types?
A: This formula works for standard fixed-rate mortgages. Adjustable-rate mortgages require more complex calculations.

Q3: Why is my balance decreasing slowly at first?
A: Early payments are mostly interest. As the balance decreases, more of each payment goes toward principal.

Q4: Can I use this for extra payments?
A: This calculator assumes regular payments. Extra payments would require a different calculation.

Q5: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans with consistent payments, but actual lender statements may vary slightly due to rounding.