Capital and Interest Computation
- Total Interest
Fixed monthly payment for a fixed rate mortgage
- c: montly payments.
- r: montly interest rate (since the quoted yearly percentage rate is not a compounded rate, the montly percentage rate is simple the yearly percentage rate divided by 12.)
- N: number of monthly payment, called the loan “term”.
- p: amount borrowed, known as loan’s principal.
In the standardized calculations used in US:
Amount owned this month = amount owned from the previous month + interest on this amount - fixed amount paid every month
As at the Nth term, the payment is done, we have