Showing posts from September, 2015

Linear Mortgage Calculation

One of my clients asked me to do a Linear Mortgage Calculation. Not a big deal were it not that I could not find the mathematical formula for it. There are a number of online calculators, so 'they' know what's going on but 'they' don't want you to know*! So, what's the deal? With a linear mortgage, also called a straight line mortgage, you pay back the same amount of  capital each period and therefore the same 'relative' amount of interest. This Dutch graph explains it. 'Aflossing' is repayment. 'Rente' is interest. Source: De Hypotheker (Dutch) So, how do you calculate this? It's relatively easy. Loan (L) is 100.000€ Years (y) is 30 Interest (i) is 2% Periods (p) is y*12 (months per year) is 360 Repayment (r) = L/p = 100.000/360 = 277,78€/month The total amount of interest (t) = L*i*y =  100.000*0,02*30 = 60.000€ The first month, the interest you pay is t/p = 60.000/360 = 166.67€ Now we can solve the followi