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How To Compute for Monthly Payments Without a Home Loan Calculator

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 want to know how a home loan calculator / mortgage calculator works, or at the very least, you want to learn how to calculate for monthly amortization payments.

If you lack any interest on home loan/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 home loan 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!

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About Jay Castillo
People encounter problems and make mistakes when buying foreclosed properties, and Jay wants to help people avoid those problems/ mistakes. Jay encountered a lot of those, which is why he started this blog in 2008 to serve as a guide where he shares lessons learned, and how to overcome challenges you may encounter when investing foreclosed properties in the Philippines … [Read more]
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