Interest only payment

[origin8r]

I have a spreadsheet that takes everyones current mortgage amounts and
calculates their new payments at my "advertised" rate. What I'd like to do
is find a formula to determine how to figure an interest only payment based
off of the standard =pmt(rate,nper,pv) formula. Assuming that the loan will
be interest only for the first 5 years of the loan.
Thanks for any advice!

 

[Dave Breitenbach]

I dont know the specifics of what you'd like to offer but...You can use
simple interest (original(or current) amount *interest rate/12) for the
interest payment for the first 5 years, and the PMT formula for the payment
amounts after 5 years.

EX:

300,000 mortgage
360 months
6%

=300k*.06/12 = $1,500(initial pmt of interest only for first 60 months)
then for remaining 300 months payment amount...
=PMT(0.06/12,300,300k) = $1,932.90

this assumes total payoff in 360 months.

There is no need to use the payment formula for the first 5 years as you
only need the interest due.



hth,
Dave

 

[origin8r]

That did it...exactly what I was looking for!! Thanks so much!

 

[Dana DeLouis]

... how to figure an interest only payment based
Hi. In the Pmt formula, as the time period tends towards infinity, the
basic monthly payment tends to only interest. Therefore, if you use a time
period of say 10000 months, the payment formula will return the interest
payment.

=PMT(6%/12,10000,300000)

Returns: $1,500

The $1,500 interest only calculation may also be calculated by finding the
interest portion of the "first" payment.

=IPMT(6%/12,1,360,300000)

returns: $1,500

HTH :>)