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Construction Loan Interest Formula

  1. #1
    Registered User
    Join Date
    01-04-2006
    Posts
    1

    Construction Loan Interest Formula

    Hello!

    I'm in the process of building a new home. I have built an Excel sheet that adds up each draw on my loan. I would like to put in a formula that calculates a daily interest based on amounts as they are drawn from the bank. I'm not paying any principal on the loan during the 9 month construction phase. The monthly rate is 6.9% Can someone help me with a formula that calculates interest as draws are taken on the loan?

    Thanks,
    EGavin

  2. #2
    Fred Smith
    Guest

    Re: Construction Loan Interest Formula

    Specifics will depend on how your spreadsheet is set up, but, in general you
    want to calculate the average daily loan balance, then multiply by 6.9%/12 to
    get the interest charge for that month.

    You could have a spreadsheet which calculates the loan balance daily, in which
    case you could multiply each daily balance by 6.9%/365 to get the interest
    charged that day, then add them up for the month.

    Or, if your spreadsheet changes only when you draw down funds, calculate
    3.9%/365*NumberDays since last drawdown.

    If you are paying the interest every month, fine. If not, add the interest at
    the end of the month to the loan balance.

    --
    Regards,
    Fred


    "EGavin" <EGavin.214xr1_1136420112.2704@excelforum-nospam.com> wrote in message
    news:EGavin.214xr1_1136420112.2704@excelforum-nospam.com...
    >
    > Hello!
    >
    > I'm in the process of building a new home. I have built an Excel sheet
    > that adds up each draw on my loan. I would like to put in a formula
    > that calculates a daily interest based on amounts as they are drawn
    > from the bank. I'm not paying any principal on the loan during the 9
    > month construction phase. The monthly rate is 6.9% Can someone help
    > me with a formula that calculates interest as draws are taken on the
    > loan?
    >
    > Thanks,
    > EGavin
    >
    >
    > --
    > EGavin
    > ------------------------------------------------------------------------
    > EGavin's Profile:
    > http://www.excelforum.com/member.php...o&userid=30127
    > View this thread: http://www.excelforum.com/showthread...hreadid=498136
    >




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