Friday, July 17, 2015

How To Compute the monthly amortization of Your Housing Loan?

How To Compute the monthly amortization of Your Housing Loan?



Did you mind asking yourself how is your monthly amortization being computed? Whether it is for a housing loan, car loan or other forms of loans, the manner on how it is being computed is the same. There is a so called factor rate that when multiplied to the loan amount, you will get the monthly amortization. Of course, any insurance are not yet included here.

To fully understand on how it is being computed, here is an illustration. We will consider here a factor rate from a Pag-IBIG interest rates as basis of our computation.


Actually, this factor rate has been derived from this formula but you don't need to know to have a deep understanding on how it is being computed by this formula, as I've illustrated the simplest computation below.



Let us assume the following conditions for a house and lot:

Contract Price -           P1,000,000
Downpayment -                100,000
Net Contract Price -       P900,000
Interest rates - 6.5%  3 years interest fixing
Note: Interest fixing is a process whereby the interest rate is being assessed after a certain period. In this case, it's a 3 years fixing
Factor rate at 6.5% interest rates - 0.00632
Loan Term - 30 Years

Given the data, the loanable amount is P900,000. Here's the computation of the monthly amortization (Principal + Interest only ).

Loanable Amount -               P900,000
Multiplied by Factor rate -      0.00632
Monthly Amortization -         P   5,688

Please note that the monthly amortization does not include yet the Mortgage Redemption Insurance (MRI), Fire Insurance and an upgrade to the Pag-IBIG monthly contribution depending on the loan amount. 

For MRI, it is computed by dividing the Loan Value by 1000 then multiplying it by 0.23. For Fire Insurance, it is the Loan Value divided by 1000 multiplied by 0.42. In this case, let us compute for it. 

MRI P900,000/1000 * .023  = P207
FI P 900,000/1000*.42        = P378
Total Insurance                   = P585

Contribution Upgrade is the additional required monthly contribution that you need to add based on the loan value that you have borrowed.

For a P900,000, the required contribution is P350, so if you are  paying monthly contribution in PagIBIG of P200, then you need to add P150 to your contribution.



So, to add up the total value of your monthly amortization, here it is:

Principal and Interest : P5,688
MRI/FI : P585
Upgrade : P150
Total Monthly amortization: P6,423

Please take note that this is only an estimate computation for us to have an idea on how our monthly amortization is being computed. The computation herein presented may differ on the actual computations provided by either Pag-IBIG or other Financial Institution.

Thank you very much for reading this article. I hope you have learned some insights here.

 Have a great day ahead...


Regards,

Ralf Roger Tagao
Certified Public Accountant
Licensed Real Estate Broker


P.S. Are you looking for affordable house and lot in Bulacan?

Or are you searching for affordable condos in manila, quezon city or San Juan? CLICK HERE












6 comments:

  1. Thank you for sharing.
    Do you also have an idea regards BPI annotation fee and how they compute it? Thank you.

    ReplyDelete
  2. Thank you this is very helpful...

    ReplyDelete
  3. This comment has been removed by the author.

    ReplyDelete
  4. Hello Everybody,
    My name is Ahmad Asnul Brunei, I contacted Mr Osman Loan Firm for a business loan amount of $250,000, Then i was told about the step of approving my requested loan amount, after taking the risk again because i was so much desperate of setting up a business to my greatest surprise, the loan amount was credited to my bank account within 24 banking hours without any stress of getting my loan. I was surprise because i was first fall a victim of scam! If you are interested of securing any loan amount & you are located in any country, I'll advise you can contact Mr Osman Loan Firm via email osmanloanserves@gmail.com

    LOAN APPLICATION INFORMATION FORM
    First name......
    Middle name.....
    2) Gender:.........
    3) Loan Amount Needed:.........
    4) Loan Duration:.........
    5) Country:.........
    6) Home Address:.........
    7) Mobile Number:.........
    8) Email address..........
    9) Monthly Income:.....................
    10) Occupation:...........................
    11)Which site did you here about us.....................
    Thanks and Best Regards.
    Derek Email osmanloanserves@gmail.com

    ReplyDelete
  5. thank you for shairng this information it has helped me to know more about home loan bank

    ReplyDelete
  6. My name is Fajar. I live in  Bedono in Central Java   I was in a very chronic financial issue and terminal health situation some few weeks back. After all my search for assistance from friends and neighbors proved abortive, I feel there was no one who truly cares. I became so exhausted due to lack of funds to expand my business and my 2 kids aged 5 and 8 were also not good looking due to lack of proper care as a result of finance. One faithful morning I saw an old time friend of my late husband and I told him all I have been going through and he said the only way he could help was to direct me to a good loan officer in USA that also helped him, He explained to me on how he was financially down and how he got boosted by this loan officer ( Mr Pedro   who grant him 7,000,000.00 USD loan at an affordable rate of 2% rate . He further assured me that they were the only legit loan firm he found online. He gave me their email &  That was how i applied and was also granted a loan and my life changed for the good. CONTACT THE ONLY GENUINE LENDER Mr Pedro VIA    Email:    pedroloanss@gmail.com  to resolve your financial mess.  

    ReplyDelete