How to Calculate Amount of Principal Left on a Mortgage

The principal amount of a mortgage loan is the original amount you had taken to finance a new home. Your mortgage payment is calculated using data comprising loan amount, interest rate and the time you have to repay the loan. While the loan payments remain unchanged over time, the loan balance and the interest being paid keep on reducing with each payment. During the initial years of the repayment, a large portion of the monthly mortgage payment is applied to the interest on the loan. However, after the first few years, more of the monthly payment is applied to the principal balance and less to the interest. You can easily calculate the remaining balance of your home loan using a simple calculator.

Things Required:

– Calculator
– Paper
– Pen


  • 1

    First of all you need to find the monthly interest rate of your mortgage. To find the monthly interest rate, divide the annual rate by 12. For instance, if the annual interest rate of your mortgage is 6 percent, you will divide 0.06 by 12 to get 0.005.

  • 2

    Now add one to the monthly interest rate. In this case,  it will be 1+0.05 which is equal to 1.005.

  • 3

    Now raise 1.005 to the number of the monthly payments you have already made. If you have made 10 instalments, raise 1.005 to the 10th power i.e. (1.005)^10 which equals 1.051140132.

  • 4

    Divide your monthly mortgage payment, that you have calculated using the Mortgage Calculator, by the monthly interest rate. If your monthly mortgage payment equals $1,260, divide 1,260 by 0.005 to get 252,000.

  • 5

    Subtract 1 from the amount you had obtained in Step 3 and multiply the answer with the amount calculated in Step 4. Here, you need to subtract 1 from 1.051140132 to get 0.051140132 and then multiply it with 252,000 to get 12887.31327.

  • 6

    Multiply the original amount of the loan with the result of Step 3. In the example, if you have borrowed $450000, you would multiply $450000 with 1.051140132 to get 473013.0594.

  • 7

    Subtract the result obtained in Step 5 from the amount calculated in Step 6 to find the principal remaining on your mortgage. Here, subtract 12887.31327 from 473013.0594 to get 460125.7461. This means, after ten months, you owe $460,125.7461 on the mortgage.

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