About

Accurate debt planning requires more than a simple monthly estimate. Users must understand the trajectory of their equity buildup versus the cost of borrowing. This tool offers high-precision calculation for two primary repayment methods: Annuity (Fixed Monthly Payments) and Differentiated (Reducing Monthly Payments).

It provides a granular amortization schedule, highlighting exactly how much of each payment applies to the principal balance versus bank interest. This distinction is vital for long-term mortgages where early payments are almost entirely interest-heavy.

Formulas

For Annuity payments, the monthly payment (A) is calculated using the loan principal (P) and monthly interest rate (r):

A = P ⋅ r(1 + r)ⁿ(1 + r)ⁿ − 1

Reference Data

Feature	Annuity	Differentiated
Monthly Payment	Constant	Decreasing
Total Interest	Higher	Lower
Initial Burden	Lower	Higher
Formula	rP1−(1+r)⁻ⁿ	Pn + Int

Frequently Asked Questions

Annuity means you pay the exact same amount every month. Differentiated means you pay a fixed amount of principal plus interest on the remaining balance, so your payments start high and decrease every month.

Differentiated payments result in less total interest paid over the life of the loan because you pay down the principal faster in the beginning.

The math is precise for standard compounding. However, it does not account for escrow (taxes, insurance) or private mortgage insurance (PMI), which are added on top of the principal and interest.