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How to compute monthly amortization payments without a mortgage calculator

You will need the following information: 

• The loan balance or Principal amount. This is selling price less down payment, if any.
• The payment term or how long you intend to pay the loan
• The annual interest rate of the loan. You get this from the bank where you intend to buy the foreclosed property or the bank where you intend to get financing.
• The amortization factor that corresponds to the payment term and annual interest rate. You can access a table of amortization factors here: Amortization Factors Table

Monthly amortization = Principal x Amortization factor

For example, you saw a foreclosed property being sold for Php 1 Million and you can purchase it with only 20% down payment, with a maximum payment term of 10 years, at an annual interest rate of 12%. What would be the monthly amortization you will have to pay if you bought that foreclosed property?

First determine the Principal amount. With a selling price of Php1,000,000 and a minimum down-payment of 20% which is Php200,000, the loan balance or principal would be:

=Php1,000,000 – Php200,000

=Php800,000

From the given example, the payment term is 10 years and the annual interest rate is 12%.

The corresponding amortization factor for a loan with a payment term of 10 years with an annual interest rate of 12% would be 0.01434709 which you can find here:Amortization factor rate Tables

Now let us calculate the monthly amortization payment:

Monthly amortization = Php800,000 x 0.01434709

= Php11,477.67

Want to check if this is correct? Try entering the same information in this mortgage calculator which you can find by clicking here.

Keep in mind that the resulting monthly amortization payment we got above is a blended amount containing both principal and interest. If you want to determine the principal only or interest only amounts, this can be done by creating an amortization table with separate columns for interest and principal. 

Determining positive cashflow

Going back to our example above, what if you learned that the current rental rates for comparable properties in that area average at around Php12,000.00 per month? Does that mean you’ll get a positive cashflow since the average rental rates are higher than the monthly amortization? It is tempting to think so, but one should also consider vacancy rates, monthly maintenance costs, property management expenses, monthly dues to the home owners association or condo corporation (depending if the property is a house in a subdivision or it’s a condo), property taxes and other applicable taxes(VAT or percentage tax, whichever is applicable), insurance, maintenance reserves, etc.

Taken from: http://www.foreclosurephilippines.com/2009/11/amortization-payment-no-mortgage-calculator.html