What is a mortgage? As defined by Merriam-Webster’s Dictionary, a mortgage is a legal agreement in which a person borrows money to buy a property, such as a house, and pays back the money over a period of years. It is also called a mortgage loan. Mortgage borrowers are usually individuals or business establishments, who loan from banks, lending institutions, credit unions, or other lending society. A mortgage is secured when a collateral of a real estate property is presented by the borrower to the lender.
We have Excel samples of mortgage calculators available below. You may also find our Mortgage Payoff Calculators helpful.
Extra Payment Mortgage Calculator in Excel
Mortgage Amortization Calculator in Excel
Mortgage Calculator Excel Based
Basic Concepts of Mortgages
Types of Mortgages
There are two main types of mortgages:
- Fixed Rate Mortgage (FRM) – It is often referred to as vanilla wafer mortgage loan. This is a fully amortizing loan wherein the interest rate of the mortgage stays the same or is fixed for a number of years. A fixed rate funding is expensive and hard to obtain. The span of time for this mortgage is typically two to five years.
- Variable Rate Mortgage (VRM) – The interest rate in this type of mortgage is not fixed. The interest rates changes or fluctuates over time based on an index. Part of the interest rate risk is transferred from the lender to the borrower, that is why it is widely used. It is also called adjustable rate mortgage (ARM), tracker mortgage, floating rate mortgage, or adjustable rate mortgage.
What Can Be Mortgaged?
If you own a property and it is legally on your name, then you can have that property mortgaged if you need to. Real estate properties can also be mortgaged. Bank Rate Mortgage Calculator and Mortgage Payment Calculators can help you easily calculate your mortgage. A chattel mortgage is the mortgage of personal properties like cars, jewelries, appliances, etc. You can take your property back even before the end of the mortgage with the chattel mortgage. There are just procedures to be followed.
Canadian Mortgage Calculator Sample
Mortgage Loan Payment Calculator
Advantages of Mortgages
- There are mortgages whose interest rates stay the same through the length of the loan.
- Helps you with budgeting knowing that your payments will stay the same every month.
- Some mortgages give you the freedom to leave anytime.
- There are mortgages that start with cheaper monthly rates.
- Monthly mortgage payments are predictable with fixed rate mortgages.
- It makes owning a home or property affordable.
- It is a cost-effective way of buying.
- Since your loan is secured by your property as a collateral, your mortgage interest rates tend to be lower than any form of borrowing or lending.
- A lot of lending institutions including banks offer mortgages, so taking advantage of it is not hard to find.
Disadvantages of Mortgages
- There are mortgages that change or fluctuate based on an index.
- The rates change anytime within the loan.
- You may incur charges if you leave a deal early in some types of mortgages.
- Because mortgages come with interest rates, you are likely to pay more than what you borrowed.
- Mortgages are secured with a collateral, which is commonly a house or a property. You need to keep up with your repayments to avoid losing your home.
Mortgages are usually long-term loans. So whatever mortgage loans you wish to take advantage of, our sample Excel mortgage calculators will keep you on track. They are available online for download. You may also find Car Loan Calculators helpful.
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