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The repayment schedule is a table which gives the periodic payment, and the principal repaid and the interests paid for a given period.

The mathematical formula for the periodic mortgage payment is: All repayments are of equal amount throughout the loan period.

Since the mortgage has a given maturity date, the payment is calculated on a regular basis, for example, every month. The periodic repayment for a fixed-rate mortgage includes a portion of repayment to the principal and an interest payment. The “PMT” (Payment) Excel function calculates the periodic mortgage payment. The calculations are shown in the sample Excel file that you can download below. We can use Excel functions to calculate the periodic (monthly) payment and its two components, the principal repaid and the interests paid for a given period. The mortgage specifies a 5% fixed annual interest rate for 30 years, and the borrower should pay back the loan on a monthly basis. In this post, I will use the following example: a mortgage of $300,000 for property purchasing. There are two types of interest rates: the fixed-rate loan and the floating (variable) rate loan, in which the interest rate is a pre-determined rate (at the beginning of the period) and post-determined rate (at the end of the period). The mortgage is also subject to different terms according to the bank’s offers and macroeconomic cycle. The borrower is contracted to pay back the lender in a series of payments that contains part of the principal as well as the interests before the maturity date. The contract sets the terms and conditions about the principal amount, interest rate, interest type, payment period, maturity, and collaterals. There are two parties in the mortgage contract: the borrower and the lender. MortgageĪ mortgage is the type of loan used in real estate, vehicles, and other types of property purchasing activities.

Proficiency in using Excel formulas can help analysts quickly process the data and build the models more concisely. Mastery of Excel is an essential skill nowadays in financial analysis and modelling tasks. In this article, Liangyao TANG (ESSEC Business School, Master in Strategy & Management of International Business (MS SMIB), 2021-2022) explains the functions in Excel that are useful to study a mortgage.