Re: Repayment mortgages
- From: Ronald Raygun <no.spam@xxxxxxxxxxxxxxxxxxxxx>
- Date: Sun, 24 Jul 2005 12:46:44 GMT
Arthur wrote:
> What is the incremental increase that is paid off the loan
> over 25 years?
Incremental increase?
> eg. The amount by which the monthly payments reduce the outstanding loan
> amount after 1 month, 6 months, 3 years
It depends on the interest rate and application method.
About half what it would be if the debt were to reduce linearly with time.
At a 6% interest rate, applied monthly at 0.5%, you'd have paid off about
0.14%, 0.88%, and 5.7% of the initial debt, respectively, after 1, 6, and
36 months.
The amount of debt outstanding when M months remain, out of a total N month
term, is (1-f^-M)/(1-f^-N) of the original, where f is the monthly interest
rate plus one, i.e. f=1.005 for the example above.
.
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- From: Arthur
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