Figuring out loans is confusing!
I’m not a broker or in finance. Like everyone, I will be paying for a home at some point. I just want to know how much my purchase costs.
Luckily, I know excel.
There are some useful calculators online which I used as cross-references:
- Propertyguru Mortgage Repayment Calculator
- DBS Repayment Schedule Calculator (includes modifiable interest rates for some years)
- Moneysmart’s Mortgage Calculator
- The govt’s Moneysense Mortgage Calculator
- Amortization Formula Reference: https://www.investopedia.com/terms/a/amortization.asp
A key feature of this calculator is seeing how much your initial loan increases (e.g. 150% of its initial value) if you stretch it out over a longer period of time. For example, if you take a$800,000 loan at a 2% interest rate, paying it over…
- 10 years: Total sum paid is $872,182 (110%) at $7,361 monthly
- 20 years: Total sum paid is $956,748 (120%) at $4,047 monthly
- 25 years: Total sum paid is $1,000,687 (130%) at $3,391 monthly
- 30 years: Total sum paid is $1,045,684 (130%) at $2,957 monthly
- 35 years: Total sum paid is $1,091,698 (140%) at $2,650 monthly!
See how the tradeoff works? You sacrifice liquidity every month for a lower total amount. In the long term, it may look like a good idea to pay off your loan quickly, but you really have to be able to give up that amount of monthly cash. This article covers both sides of the dilemma quite well I think!
If you’d like to play with it and add your own figures, you can download the calculator here:
Lemme know if you:
-Think I missed anything out
-Want a clear explanation of something
-Think of any improvements I can make
Would love to hear your feedback to make this a more useful calculator.