Mortgages

See also:

The dollar ($) has been used in these examples, but any other currency (€, £, F, ¥, R, DA, Rs… etc.) may be used.

Most of the calculations below may use Fixed (unique interest rates) or Variable rates.

Real-life examples:

Regular mortgage

  • USA, Europe, Australia…
  • Canada

Irregular mortgage with lump sum payments

Mortgage using variable interest rates

Adjustable rate mortgage (ARM) with payments adjusted according to the interest rates in force

Mortgage that includes unknown future interest rates with payments adjusted as these rates become known (Loan example)

Reverse mortgage

Regular mortgage
USA, Europe, Australia…
Input screen:

  • Reimbursement frequencies can differ : ex. twice monthly, biweekly, weekly, every x days etc.

Results screen:

  • Lump sums may be added at any time.

Canada

For Canadian mortgages, the compounding period is semiannual.



Irregular mortgage with lump sum payments

The data entry screen is as shown above. The changes are made in the Results screen (payment schedule), which can be totally customized. See below.

  • The borrower wishes to pay $5000 on the first of January of every year. In order to achieve this, change all those payments at once by selecting those specific payment lines (“Ctrl” key and mouse) then with the right mouse clic, change the payments.

Mortgage using variable interest rates

Margill includes many variable interest rate tables. You can also create your own in a snap.

You can also specify that x% is to be added (or subtracted) from the published rates.

Input screen :

Results screen:

Adjustable rate mortgage (ARM) with payments adjusted according to the interest rates in force

A future (predicted) variable interest rate table is created.

This table is then used for the calculation. In this example the applicable rates are the rates above plus 0.75%.

The payments are then automatically adjusted according to the rates. The payments will vary to first cover (refund) interest and the balance of the payment to refund the principal.

See the “Payment” column below from the Results screen.

Reverse mortgage

Reverse mortgages have a different purpose than normal forward mortgages do. With a reverse mortgage, you are taking the equity out in cash. So with a reverse mortgage your debt increases and your home equity decreases.

Let’s do an example:

The Jones’ home equity is about $350,000 and now being at retirement age, they wish to “live a little” without selling their home. They wish to receive $75 000 up front and then $2500 in regular payments for 60 months. The interest rate for the loan is 9.5% annually.

In “Fixed Rate Calculations” use “Recurring Payments (Amortization)”. The initial principal is $75,000 since this is the upfront amount that was loaned to the Jones and the payment is minus $2500 since the Jones are not reimbursing their loan but receiving $2500 per month for 60 months.

After 60 months, the Jones would owe $310,485.

You can then save the schedule and include any irregular incident : larger monthly cash loan (- amount), reimbursement (+ amount) at any time, etc.

Total flexibility