You just taken out a $300 000 home loan over 25 years with a fixed 8.25% interest rate (calculated monthly)
Calculate the amount of your monthly repayments. Home loan calculations are often based on an Annuities formula.
i = Periodic Interest Rate
n = Number of Periods
D = Periodic Deposit
A = Final amount
A = D * ( ( 1 + i ) ^ n – 1 ) / i )
D = A * ( i / ( 1 + i ) ^ n – 1 ) )
D = 300 000 [ ( 0.0825 / 12 ) / ( ( 1 + ( 0.0825 / 12 ) ) ^ ( 25 * 12 ) – 1 )]
Is this formula right? Or am I just writing it out wrong? I went to a banking website and put in the numbers and got this answer:
D = $2,369.10 Monthly
Total payment over 25 years $708,432.94
Can someone tell me what I did wrong in the formula? And what the formula for calculating the total payment over 25 years would actually be? Wouldn't it just be D * 300 (25 years multiplied by 12 months)?