# loan payments - Interest only?

1. ## loan payments - Interest only?

I know the pmt function allows for a regularly mortgage payment to be calculated, but is there a function, or does anyone know a working formula to calculate an interest only payment?

2. Isn't is just a straight interest calculation? multiply the rate by the principal and that should be the payment.

3. ## Re: loan payments - Interest only?

Steach91 wrote:
> I know the pmt function allows for a regularly mortgage payment to be
> calculated, but is there a function, or does anyone know a working
> formula to calculate an interest only payment?

mortgage or otherwise. I will assume a US mortgage.)

It is simply the interest accrued during the month (or payment period).
Ostensibly, for a \$150,000 loan at 7% interest rate for example, that
is simply 150000*7%/12 = \$875. And that is indeed what one online
interest-only calculator computes.

However, for most US loans, I believe interest compounds daily. In
order to keep the interest-only payments equal (I presume), I would
expect the monthly payment to be \$877.47 or a rounded equivalent; that
is:

=fv(7%/365, 365/12, 0, -150000) - 150000

4. ## Re: loan payments - Interest only?

Whatever the First months Interest Payment is \$\$\$- It is the Same Every
month unless or until you begin paying against the Principal.

"Steach91" <Steach91.2aac2z_1151788501.7362@excelforum-nospam.com> wrote
in message news:Steach91.2aac2z_1151788501.7362@excelforum-nospam.com:

> I know the pmt function allows for a regularly mortgage payment to be
> calculated, but is there a function, or does anyone know a working
> formula to calculate an interest only payment?
>
>
> --
> Steach91
> ------------------------------------------------------------------------
> Steach91's Profile: http://www.excelforum.com/member.php...o&userid=30234

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