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Duplex Mortgage Payment Formula:
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The Duplex Mortgage Formula calculates the fixed monthly payment required to fully amortize a loan over its term. This formula is commonly used for mortgage calculations and other installment loans.
The calculator uses the duplex mortgage formula:
Where:
Explanation: This formula calculates the fixed payment amount that covers both principal and interest over the loan term, ensuring the loan is fully paid off by the end of the period.
Details: Accurate mortgage calculation is essential for financial planning, budgeting, and understanding the total cost of borrowing. It helps borrowers compare different loan options and make informed decisions.
Tips: Enter the principal amount in currency units, interest rate as a decimal (unitless), and number of payment periods. All values must be positive numbers.
Q1: What is the difference between annual and periodic interest rate?
A: The periodic interest rate is the annual rate divided by the number of payment periods per year. For monthly payments, divide the annual rate by 12.
Q2: Can this formula be used for different payment frequencies?
A: Yes, but you must ensure the interest rate and number of periods match the payment frequency (monthly, quarterly, etc.).
Q3: What happens if I make extra payments?
A: Extra payments reduce the principal faster, which decreases the total interest paid and may shorten the loan term.
Q4: Are there any limitations to this formula?
A: This formula assumes a fixed interest rate and equal payment amounts throughout the loan term. It doesn't account for variable rates, fees, or other loan features.
Q5: How does the interest rate affect the payment amount?
A: Higher interest rates result in higher monthly payments, as more money goes toward interest rather than principal reduction.