How To Compute Monthly Amortization Payments Without A Mortgage Calculator

Updated on May 5, 2015 by 27 Comments

In this post I will share how to compute for monthly amortization payments for foreclosed properties without the need to use any special mortgage calculator. By the way, this would also work for installment loans for assets other than real estate where the monthly amortization payments also contain both principal and interest.

If you’re a real estate investor or if you want to become one, I’m pretty sure you’re interested to learn how a loan calculator or mortgage calculater works or at the very least, you want to learn how to calculate for monthly amortization payments.

If you lack any interest on mortgage calculators or if you are simply afraid of numbers, I’m really sorry but you have no choice but to learn this because real estate investing is a numbers game.

Real estate investing is a numbers game

Real estate investing is a numbers game and one number that you need to know is the monthly amortization you will have to pay for a foreclosed property that you are looking at. It will help determine if an investment property will produce a positive cashflow. Without positive cashflow, you will have no passive income, and you can kiss your dreams of becoming financially-free goodbye…

I’ll keep it short and simple

You will need the following information:

  • The loan balance or Principal amount. This is selling price less down payment, if any.
  • The payment term or how long you intend to pay the loan
  • The annual interest rate of the loan. You get this from the bank where you intend to buy the foreclosed property or the bank where you intend to get financing.
  • The amortization factor that corresponds to the payment term and annual interest rate. You can access a table of amortization factors here: Amortization Factors Table

Monthly amortization = Principal x Amortization factor

For example, you saw a foreclosed property being sold for Php 1 Million and you can purchase it with only 20% down payment, with a maximum payment term of 10 years, at an annual interest rate of 12%. What would be the monthly amortization you will have to pay if you bought that foreclosed property?

First determine the Principal amount. With a selling price of Php1,000,000 and a minimum down-payment of 20% which is Php200,000, the loan balance or principal would be:

=Php1,000,000 – Php200,000


From the given example, the payment term is 10 years and the annual interest rate is 12%.

The corresponding amortization factor for a loan with a payment term of 10 years with an annual interest rate of 12% would be 0.01434709 which you can find here: Amortization factor rate Tables

Now let us calculate the monthly amortization payment:

Monthly amortization = Php800,000 x 0.01434709

= Php11,477.67

Want to check if this is correct? Try entering the same information in this site’s mortgage calculator which you can find by clicking here.

Keep in mind that the resulting monthly amortization payment we got above is a blended amount containing both principal and interest. If you want to determine the principal only or interest only amounts, this can be done by creating an amortization table with separate columns for interest and principal. I’ll be sharing how this can be done in another post.


I’m quite sure though that there are interest only mortgage calculators out there although I can’t say if there are any that are available for free. Do let me know through the comments section if you do find one.

Determining positive cashflow

Going back to our example above, what if you learned that the current rental rates for comparable properties in that area average at around Php12,000.00 per month?

Does that mean you’ll get a positive cashflow since the average rental rates are higher than the monthly amortization?

It is tempting to think so, but one should also consider vacancy rates, monthly maintenance costs, property management expenses, monthly dues to the home owners association or condo corporation (depending if the property is a house in a subdivision or it’s a condo), property taxes and other applicable taxes(VAT or percentage tax, whichever is applicable), insurance, maintenance reserves, etc.

I’ll stop for now with the monthly amortizations and I’ll just discuss these other things to consider in another post. I would not want anyone out there to feel overwhelmed.

Now what?

As they say, practice makes perfect so why don’t you try computing for the monthly amortizations for any of the foreclosed properties that you might be interested in from the various lists available in Foreclosure Philippines? If you learn how to do this, you would then be able to easily compute for the monthly amortizations of a property by hand, as long as you have enough information. It would also help if you have a printed copy of the table of amortization factors handy.

Questions? Please do leave a comment below.

Happy learning!

To our financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Click here to contact me via E-mail
Mobile phone (Call/SMS): +639178843882
Facebook:Foreclosure Philippines fan page

Text by Jay Castillo. Copyright © 2009 All rights reserved.

P.S. – If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

P.P.S – If you feel that anyone else you know might benefit from this post, please do share this to them and don’t forget to subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. If your inbox is getting full, you may subscribe through my RSS Feed instead.

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  • sharlynne malate

    This is a great tool for me! I have learned so much from your site Mr. Castillo, am thankful for sharing this great info’s!

  • meg liberia

    Please enlighten me about the difference b/w a simple interest and diminishing return.
    Would appreciate if you can give example computations for each kind.

  • Jon Tanpoco

    Sir, you were looking for an interest-only mortgage calculator that’s free? Here you go:

    Hope that helps :)

  • Mortgage

    This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.

  • Bamboo

    Very informative!
    Hi! just want to ask if how much shld i pay if;
    after 5 mnths paying mnthly amortization, then on the 6th mnth im going to pay in full settlement. What would be the computation on this? thanks!

  • Gil M. Banaria

    Jay, this is very hepful. The key is that you’ve made the approach quite simple and backed it up with an illustration without hifallutin’ jargon. I’ll try it in my usual lot sales or house-and-lot sales. Thanks!

    • Jay Castillo

      You’re welcome Gil! Glad to be of help!

  • amortization formula

    Agree too, many auto calculator online but no one explain for the details and show some example like your. this is very easy to understand and I could calculate for my own and print out to talk with banker for the point I need. Such a nice post.

  • Bryan Uy

    Thanks again Jay!

    I know there are several online mortgage calculators out there but I love this as I can put this on my mobile phone or print it and put it in my wallet. I’m gonna do this tomorrow so I will be forced to look for great properties! I see potential deals already but without this tool, one wouldn’t be ablt to determine if it really is a great one!

    Thanks again!
    .-= Bryan Uy´s last blog ..Invest in Cash in a Flash: A P300k Package for only P750 by Mark Victor Hansen and Robert G. Allen =-.

    • Jun Tale

      Bryan, mukang dead serious kana ha. Anyways i am pretty sure you will get more interested once you get your first passive income and most of all your very own first property at a price way beyond the market price. Ah you know what i mean…SECRET natin to..hehe

  • Kevin Simpson

    Mortgage calculator is something that really helps people to make their finance program before buying a house

    • Jay Castillo

      Hi Kevin, I agree. Thanks for visiting!

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  • Menandro

    Great passive income lessons here…

    Thanks Jay!
    .-= Menandro´s last blog ..Your Passive Income Passion: Opportunities to Have a Better Life =-.

    • Jay Castillo

      Thanks Menandro! By the way, you have a wonderful site!

  • KamoteChunks

    tnx for the information Jay.. as always, your a big help… im going to do real estate investing next year.. jay can u give us one example of your deals? tnx in advance.. GOD BLESS.

    • Jay Castillo

      Hi Kamotechunks! You’re welcome and i’m glad to know you are going to start in real estate investing. Go for it!!!

      The best example would probably be my first rent-to-own deal which I bought last February 2009. I bought it from an auction at about 40% below market value. I then fixed it up and sold it through a rent-to-own scheme. It now produces about 5K monthly positive cashflow/passive income. This is the same deal that I talked about when Trace Trajano interviewed me and the audio recoding is included in the CD that Trace was supposed to give away which I mentioned here:

      I will be describing this deal in greater detail in a project I am working on right now. :-)

      • KamoteChunks

        tnx Jay ^_^. tnx for the encouraging words, yes im 120% sure that im going to venture this kind of investment. jay tanung ko lang tungkol sa comition ng brokers.. i understand that your going to give the broker 5% to 6% commission on each transaction. pag rent to own nalaman ko din na pwede mo bigay sa kanila ung 1 month rent..

        eto question ko, pano pag full payment ung piniling option nung costumer. example.. costumer paid 1M for a house u bought for a dp of 120k (600k auction price) an then i pay the bank 480k remaining balance, 50k in repairs. where would i base the commission? from the 350k that i earned? or from the 1m selling price?

        Tnx in advance.
        GOD BLESS!

        • Jay Castillo

          Hi Kamotechunks, the standard practice would be to base the commission on the selling price which is 1M in your example.

  • Millionaire Acts

    Nice tip Jay! How about if we don’t have access to the amortization factors table? Is there a way to compute it?
    .-= Millionaire Acts´s last blog ..Manila Bulletin Blog-O-Rama Features Millionaire Acts =-.

    • Jay Castillo

      Hi Tyrone, if you don’t have access to the amortization factor table, you can compute for it as well. The formula I use is as follows:

      Amort factor=I/(1-(1+I)^-M)
      I = the monthly interest rate or annual interest rate divided by 12
      M = the loan payment term in months

      Of course I only use this within excel as I would not want to compute this by hand. I would still prefer to keep a copy of the amort factor table in my wallet so I don’t need to bring my laptop with me everywhere, and I can compute by hand or use the calculator on my cellphone. =)
      I believe there is also a built in function in excel that can do this calculation but I haven’t tried that yet. I’ll illustrate this in another post.

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  • Liza Lavin

    Jay, will this work if you want to determine how much your buyers would pay if you want to do a rent to own for your property?

    • Jay Castillo

      Hi Liza. Yes, this will also work if you are the seller. Just use the annual interest rate you will give your tenant-buyer, the length of the rent-to-own agreement, and of course your selling price less the downpayment/option money.

      • liza lavin

        Jay, this is standard, right? So all banks use too? Thank you once again Jay!

        • Jay Castillo

          Hi Liza, yes, banks also use this as their standard way of computing for the monthly amortization that includes principal and interest. You’re welcome!