: Mortgage principal reduction For a 30-year mortgage that started less than a year ago, how much will the monthly payment be after making an additional 0,000 payment towards the principal? The mortgage currently has a

It will most likely be ,380.

This will depend on the specifics of your mortgage contract, but the monthly payment generally won't automatically change in this situation.

If you're paying off such a substantial portion of the outstanding balance, you may want to look at refinancing the loan entirely to get a lower interest rate and/or lower monthly payment, although there will be additional costs associated with this.

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You say the current balance is 5,000. So let's say you're 2 months in. Solving for the interest rate

with
s = principal
d = payment
n = number of months

s = 295000
d = 2400
n = 30*12 - 2 = 358

s = (d - d (1 + r)^-n)/r

? r = 0.00759326

? effective annual rate = (1 + r)^12 - 1 = 9.50225 %

If you carried on with this for 4 more months the balance would be

x = 4
balance = (d + (1 + r)^x (r s - d))/r = 294352.72

Checking the final balance if continued for all 358 months

x = 358
balance = (d + (1 + r)^x (r s - d))/r = 0

Final balance is zero, as required.

So if after 4 months you paid in nothing

s = 294352.72
n = 30*12 - 6 = 354
r = 0.00759326

d = r (1 + 1/((1 + r)^n - 1)) s = 2400

The payment remains at 00, as expected.

If after 4 months you paid in 0000

s = 294352.72 - 100000 = 194352.72
n = 30*12 - 6 = 354
r = 0.00759326

d = r (1 + 1/((1 + r)^n - 1)) s = 1584.65

The payment reduces to 84.65

You should be able to apply these example calculations your situation.

With revised figures

Original Loan Amount 5,200.00
Term 360
Interest Rate 4.75% (nominal, compounded monthly)
Monthly payment is ,380 exactly

The above figures are not consistent. For example, calculating the loan term.

s = 295200
r = 0.0475/12
d = 2380

n = -(Log[1 - (r s)/d]/Log[1 + r]) = 170.925

If you are paying ,380 per month the loan should be repaid in 171 months.

Check

www.planabettermortgage.com.au/loan-calculators/how-long-to-repay.htm

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