What is the monthly payment for a $800,000 mortgage for the first 119 payments that is due in 10 years, has a 25 year amortization, at 5% interest? What is the amount of the 120th payment?

I use excel to compute the amortization table,

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But, I'm still don't understand the question. If I finish the loan at payment 300, for 25 years or I ended at 120 with a full balloon payment.

I ask my professor and he told me: 'If mortgage due in 10 then final payment is a balloon payment including interest and principal'.

Question: I need to know what schedule I suppose to calculate (on excel or any other way that could be easier), and some hint to understand what actually the problem ask.


  • 1
    $\begingroup$ Well, it seems as though this is a balloon mortgage. Set to a $25$ year schedule (so the normal monthly coupon is the same as for an ordinary $25$ year mortgage). As it has a declared $10$ year final, however, the $120^{th}$ payment must include all remaining principal (the balloon) in addition to the normal scheduled interest payment. At least, that's how I read it. $\endgroup$
    – lulu
    Dec 7 '15 at 15:11
  • $\begingroup$ Then, my last payment is the 120th, no? And I suppose to use a fixed interest for each payment?(5%)? $\endgroup$
    – Electro82
    Dec 7 '15 at 15:17
  • $\begingroup$ I hate to speak for your professor, but that would certainly be my reading of the question. $\endgroup$
    – lulu
    Dec 7 '15 at 15:18

Let be $L=800,000$ the loan to be repayed in $t=25$ years (or $n=300$ months) and $P$ the monthly payment at nominal interest $i^{(12)}=5\%$ convertible monthly.

The effective monthly interest rate is $i_m=\frac{i^{(12)}}{12}=0.42\%$ an then we have $$ L=P\,a_{\overline{n}|i_m}=P\frac{1-(1+i_m)^{-n}}{i} $$ from wich we find the constant payment $$ P=\frac{L}{a_{\overline{300}|0.42\%}}=4,676.72 $$


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