One of the literally cool parts aspects of Microsoft Excel is the functions Microsoft has created for you to use. This means that rather than have to develop a function from scratch you can use pre-built ones to do a plethora of tasks like building your own Mortgage Calculator. The Mortgage Calculator or Pmt function is just one of many Financial Functions available.
Okay, so how to build a mortgage calculator...
Calculate Mortgage Interest
The first thing we have to do is to start by setting up a few basic headings. So lets begin by beginning a new workbook and clicking in the first cell A1. Enter into cell address A1 the heading - Monthly Loan Repayments. Next off, enter into cell address A2 - estimate of Loan, cell address A3 - Interest Rate, cell address A4 - length of Loan and then in A6 - Monthly Repayment.
In example mortgage calculator, we will take the Loan Amount, Interest Rate and length of Loan and calculate your Monthly Repayment. Okay so in the corresponding field B1 enter the value of 0,000 and make sure you format the field as a currency. In cell B2 enter a value of 9.25% and format the field as a ration and then ultimately enter in a value for the length of the Loan as 25. The value you enter into the length of the Loan field is in years.
Now its time to originate the recipe that will do your calculation for the Monthly Repayment. The function we will use for this calculation is called the Pmt function. The Pmt function always returns a negative estimate so one of the things we will need to do is to change it into a inevitable number, but a diminutive on that later.
There are three arguments we will use for this recipe and they are -
= Pmt(Monthly Interest Rate, estimate of Payments, estimate Borrowed)
So to work out the Monthly Interest Rate we naturally take the value in B3 and divide it by 12 - B3/12. The Pmt function works on the basic of the estimate of payments you are going to make, so if we are going to make monthly payments on our mortgage we naturally take the estimate of years in cell B4 and multiply it by 12 - B4 *12.
This means that to calculate the Monthly repayment for our mortgage we need to enter the following recipe -
= Pmt(B3/12, B4*12, B2)
Now as I said before, the Pmt function always returns a negative value, so to turn this into a inevitable value we naturally type the Pmt function with the Absolute Function encapsulating it as shown below -
= Abs(Pmt(B3/12,B4*12,B2))
Simply type the recipe above into the cell B6 and press the enter key. You must now format the cell address B6 as a currency and you can do that by naturally pressing the Dollar seal on the Formatting Toolbar. As soon as you enter the recipe and press enter you should get a succeed of 12.76. If you do not get this answer, naturally go back and make sure that you have entered the recipe correctly.
The cool part about this Mortgage Calculator is that you can go back and change any one of the values in B2, B3 and B4 which are the Loan Amount, Interest Rate and length of Loan to work out what your monthly mortgage repayments will be.
The cool part about this straightforward tool is that it tells you literally speedily whether borrowing heavy amounts from the bank is worth it and whether you can literally afford that mortgage. Why not check out what your repayments will be if your interest rate went up by 2 or 3%, it can be literally spellbinding to see the impact on your budget.
Simple tools like this can save you thousands of dollars and can also help you see what changes interest rates will have on your own budget. It is literally worthwhile building yourself a Budgeting Spreadsheet and the mortgage calculator to work out just what you literally can afford especially in these uncertain times.
How To Build A Mortgage Calculator For Free in Microsoft Excel! Calculate Mortgage Interest
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