How To Build A Mortgage Calculator For Free In Microsoft Excel

How To Build A Mortgage Calculator For Free in Microsoft Excel

Summary: One of the really 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.

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Article Body: One of the really 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

The first thing we have to do is to start by setting up a few basic headings. So lets begin by starting a new workbook and clicking in the first cell A. Enter into cell address A the heading - Monthly Loan Repayments. Next off, enter into cell address A - Amount of Loan, cell address A - Interest Rate, cell address A - Length of Loan and then in A - 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 B enter the value of $, and make sure you format the field as a currency. In cell B enter a value of .% and format the field as a percentage and then finally enter in a value for the Length of the Loan as . The value you enter into the Length of the Loan field is in years.

Now its time to create the formula 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 number so one of the things we will need to do is to convert it into a positive number, but a little on that later.

There are three arguments we will use for this formula and they are -

= PMT(Monthly Interest Rate, Number of Payments, Amount Borrowed)

So to work out the Monthly Interest Rate we simply take the value in B and divide it by - B/. The PMT function works on the basic of the number of payments you are going to make, so if we are going to make monthly payments on our mortgage we simply take the number of years in cell B and multiply it by - B .

This means that to calculate the Monthly Repayment for our mortgage we need to enter the following formula -

= PMT(B/, B, B)

Now as I said before, the PMT function always returns a negative value, so to turn this into a positive value we simply type the PMT function with the Absolute Function encapsulating it as shown below -

= ABS(PMT(B/,B,B))

Simply type the formula above into the cell B and press the enter key. You must now format the cell address B as a currency and you can do that by simply pressing the Dollar Symbol on the Formatting Toolbar. As soon as you enter the formula and press enter you should get a result of $.. If you do not get this answer, simply go back and make sure that you have entered the formula correctly.

The cool part about this Mortgage Calculator is that you can go back and change any one of the values in B, B and B 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 simple tool is that it tells you really quickly whether borrowing massive amounts from the bank is worth it and whether you can really afford that mortgage. Why not check out what your repayments will be if your interest rate went up by or %, it can be really interesting 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 certainly worthwhile building yourself a Budgeting Spreadsheet and the mortgage calculator to work out just what you really can afford especially in these uncertain times.