📖 The story
The same $360,000 loan (3.8 % nominal rate, monthly installment $1,740) has a fixed-rate period of 10 years. How large is the remaining debt at the end of the fixed period?
ℹ Nominal interest, constant monthly installment.
Topics › Real Estate & Loan Financing › Remaining debt after the fixed-rate period
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Real Estate & Loan Financing
Remaining debt after the fixed-rate period
Change any number and press "Calculate" – or use "Type in" on the right to watch it entered step by step.
What you learn
Look closely before you sign: with a low initial repayment little is paid off after the fixed-rate period – the large rest needs follow-up financing at then-unknown rates.
In short: With a low initial repayment a large balance remains after the fixed-rate period, for which follow-up financing becomes necessary.
Formula
Remaining debt = D·q^n − R·(q^n − 1)/(q − 1), q = 1 + i_nom/m
With the example numbers
Restschuld = 360,000.00 $·qn − 1,740.00 $·(qn−1)/(q−1), q = 1+0.0380/12, n = 120 = 272,575.54 $
How to read the formula
The remaining debt is the compounded loan minus the compounded installments: D·qⁿ − R·(qⁿ−1)/(q−1). It shows in black and white how little is paid off after the fixed-rate period with low repayment – and how large the follow-up financing turns out.
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