Podcast
Questions and Answers
What does the variable 'A' represent in the monthly payment formula?
What does the variable 'A' represent in the monthly payment formula?
If a mortgage has an annual interest rate of 7.5%, what is the monthly interest rate 'i'?
If a mortgage has an annual interest rate of 7.5%, what is the monthly interest rate 'i'?
What is the primary purpose of a mortgage?
What is the primary purpose of a mortgage?
Which of the following components is not included in the calculation of total interest on a mortgage?
Which of the following components is not included in the calculation of total interest on a mortgage?
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How is the total number of payments 'n' calculated in the amortization formula?
How is the total number of payments 'n' calculated in the amortization formula?
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How is the down payment calculated?
How is the down payment calculated?
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What does an amortization schedule specifically detail?
What does an amortization schedule specifically detail?
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What does an amortization table represent?
What does an amortization table represent?
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What is the relationship between the purchase price, down payment, and mortgage loan?
What is the relationship between the purchase price, down payment, and mortgage loan?
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What does the term 'outstanding balance' refer to?
What does the term 'outstanding balance' refer to?
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Study Notes
Mortgage Overview
- A mortgage is a process allowing you to pay for a property's cost over time, not immediately.
- It's a loan secured by real estate or personal property.
- An example is when a buyer saves part of the property cost but needs a loan to cover the remaining balance.
Mortgage Loan
- A mortgage loan uses the property as collateral for a loan from a financial institution.
- Collateral is the property held as security against the loan.
- The mortgage loan amount equals the purchase price minus the down payment.
Down Payment
- A down payment is a certain percentage of the property's purchase price.
- It's also known as the buyer's equity.
- It's the initial payment when buying something with an agreement to pay the rest later.
- Down Payment = Purchase Price x Down Payment Percentage
Amortization Method
- A method of paying a loan (principal and interest) in equal amounts at regular intervals.
- The term of a loan is the total number of payments.
- An amortization table displays the installment payment schedule.
- It shows how much of each payment goes to principal and interest over the loan term.
Chattel Mortgage
- A mortgage on movable property.
- Outstanding Balance is the remaining debt at a specific time.
Example Calculations
- For a Php 2,205,600 house, with a 20% down payment, the down payment is Php 441,120.
- The mortgage loan is Php 1,764,480.
Formula for Monthly Payment
-
A = i x P (1 + i)n / (1 + i)n -1
- A = Monthly payment
- P = Loan amount (initial amount)
- i = Monthly interest rate
- n = Total number of payments (years * months)
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Total Payment = Monthly Amortization x Total number of payments.
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Total Interest = Total Payment - Mortgage Loan Amount.
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Description
This quiz covers the fundamentals of mortgages, including the definition, mortgage loans, down payments, and the amortization method. Test your understanding of how mortgages work and the key components involved in securing a loan for property purchase.
