Excel Mortgage Payment Formula Microsoft Office Training Excel Training

The task at hand… In Excel it is possible to calculate monthly repayments on a mortgage by using the PMT function.

In Excel it is possible to calculate monthly repayments on a mortgage by using the PMT function.

The PMT function has the following arguments: Rate – this is interest rate on the mortgage loan divided by 12

Rate – this is interest rate on the mortgage loan divided by 12

The PMT function has the following arguments: Nper – this is the term of the mortgage or the number of monthly repayments you will make. For example with a 25 year mortgage you would make 12 multipled by 25 monthly repayments.

Nper – this is the term of the mortgage or the number of monthly repayments you will make. For example with a 25 year mortgage you would make 12 multipled by 25 monthly repayments.

The PMT function has the following arguments: PV (present value) - is the mortgage amount – the amount you have borrowed, expressed as a negative value.

PV (present value) - is the mortgage amount – the amount you have borrowed, expressed as a negative value.

The PMT function has the following arguments: FV - you can leave blank. FV stands for future value. As the future of the loan when it has be repaid will be zero and zero is the default for this argument it can be left empty.

FV - you can leave blank. FV stands for future value. As the future of the loan when it has be repaid will be zero and zero is the default for this argument it can be left empty.

The PMT function has the following arguments: Type – here you state whether you will make the payment at the beginning or at the end of each month, type 1 if at the beginning or 0 if at the end. Sorry no option for halfway through the month.

Type – here you state whether you will make the payment at the beginning or at the end of each month, type 1 if at the beginning or 0 if at the end. Sorry no option for halfway through the month.

Our Example An example. John takes out a £250,000 mortgage over 25 years with an annual interest rate of 4.5%. He will make his mortgage payment on the 1st of each month. Rate would be 4.5%/12 Nper would be 25*12 PV would be -250000 Type would be 1

An example. John takes out a £250,000 mortgage over 25 years with an annual interest rate of 4.5%. He will make his mortgage payment on the 1st of each month.

Rate would be 4.5%/12

Nper would be 25*12

PV would be -250000

Type would be 1

Our Example To practice this example in Excel, in a blank spreadsheet enter the following data starting in A1. i) Rate goes in A1, 4.5% goes in B1 and so on for each row. Rate 4.5% Term 25 Mortgage 250000 Repayment

To practice this example in Excel, in a blank spreadsheet enter the following data starting in A1.

i) Rate goes in A1, 4.5% goes in B1 and so on for each row.

Rate 4.5%

Term 25

Mortgage 250000

Repayment

Our Example To practice this example in Excel, in a blank spreadsheet enter the following data starting in A1. i) Rate goes in A1, 4.5% goes in B1 and so on for each row. Rate 4.5% Term 25 Mortgage 250000 Repayment

To practice this example in Excel, in a blank spreadsheet enter the following data starting in A1.

i) Rate goes in A1, 4.5% goes in B1 and so on for each row.

Rate 4.5%

Term 25

Mortgage 250000

Repayment

Our Example ii) Click into cell B4 – this is where we will calculate the monthly repayment

ii) Click into cell B4 – this is where we will calculate the monthly repayment

Our Example iii) Now click on the fx button on the Excel formula bar just above the spreadsheet’s column headers. This will open the Insert Function dialogue box. In the search box type PMT and then click Go. Select PMT from the results list below and then click OK In the Rate box type B1/12 In the Nper box type B2*12 In the Pv box type –B3 Leave the FV box empty In the Type box type 1

iii) Now click on the fx button on the Excel formula bar just above the spreadsheet’s column headers. This will open the Insert Function dialogue box. In the search box type PMT and then click Go. Select PMT from the results list below and then click OK

In the Rate box type B1/12

In the Nper box type B2*12

In the Pv box type –B3

Leave the FV box empty

In the Type box type 1

Our Example iv) Click OK Your answer should be 1384.39

iv) Click OK Your answer should be 1384.39

More Excel Tutorials For more Excel Tutorials visit the Blue Pecan Free Microsoft Office Training page. For a direct link to this Excel Training tutorial

For more Excel Tutorials visit the Blue Pecan Free Microsoft Office Training page.

For a direct link to this Excel Training tutorial