Calculations for a fully amortized mortgage

Tell Moneylender how to do calculations for you loans. Get the numbers to come out the way you want.
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mark415
Posts: 13
Joined: Tue Sep 28, 2021 10:17 pm

Calculations for a fully amortized mortgage

Post by mark415 »

Hi Josh,

I have a 30-year fully amortized mortgage loan that amortizes on a predetermined schedule. Even if a payment is many months late, interest on the portion of the principal due ceases to accrue on the due date of the payment. (i.e. late payments do not affect amortization)

What loan settings do I use in Moneylender for that?

Thanks,
Mark
wtech_josh
Site Admin
Posts: 80
Joined: Tue Jul 30, 2019 7:17 pm

Re: Calculations for a fully amortized mortgage

Post by wtech_josh »

Hi Mark!

After setting up the loan like a normal amortized loan, go to the Settings tab > Loan Settings. Change the Loan Engine at the top to "Explicit Amortization for Chronic Underpayment" and click Save.

When the loan is on time, it behaves the same as the Amortized loan engine. If the loan is late, it'll credit payments on the oldest unpaid due date (or probably on the expiration of the grace period of the oldest unpaid due date so it correctly assesses a late fee) so each payment only ends up having to cover one month of interest.

It doesn't have a lot of extra mechanisms to handle lots of little payments or large payments, but if the borrower is generally sending the regular payment amount with each payment, it should give you the desired results. You can try it with and without the "Overpayments Carry Forward" checked (also on the Loan Settings window) to see which fits better for your loan, too.

Let me know how it looks after you switch the engine. If a borrower pays for a couple months in a single payment, you might need to split it into two payment entries for Moneylender to credit it properly since each payment is assigned to the oldest unpaid due date individually.

Josh
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