When you have a mortgage in a bank, one important thing is to repay the loan on time. In addition to the principal amount you borrowed, the repayment amount in this process includes interest on the loan that must be paid for each period. So, with a $1 million loan, assuming a 30-year term, how do we calculate this interest

How do you calculate the 30-year interest on a million mortgages

One thing you need to understand first is that the amount of your interest depends on four important factors: the principal of the loan, the length of the loan, the interest rate, and the way you choose to repay it. The other two factors affecting your interest, for example, are:

1. Interest rate

IF YOU ARE A FIRST-RATE MORTGAGE, THEN IN GENERAL, THE 30-YEAR INTEREST RATE ON THE PROVIDENT FUND LOAN IS 3.1%; THE INTEREST RATE ON COMMERCIAL HOUSING LOANS IS BASED ON LPR4.2%, WHICH IS LIMITED TO THE ORIGINAL LPR LESS 0.2%, I.E. 4%, WHICH WAS PUBLISHED ON 20 OCTOBER 2023。

Method of repayment

You can choose the way you repay the same principal or equivalent interest, so let's see how they affect interest:

- Equivalent principal: Total interest = (terms + 1)* Principal loan * Monthly interest rate / 2。

- Equivalent principal: Interest in this mode is related to a multiplication, which is more complex than the former, and is calculated through a loan calculator after you know the principal, duration, interest rate。

So, assuming that we use the above interest rate to select the principal amount of $500,000 for a 30-year term of 360, for example, we can calculate:

- Provident Fund loans: interest on principal equivalents of approximately $466.3 million and interest on principal equivalents of approximately $5.373 million。

- Commercial loans: interest on the equivalent principal amounts is about $6,017,000 and interest on the equivalent principal amounts is about $7,187,000。

Summarizing, the formula for calculating interest on loans is: interest on loans = principal of loans * interest rate * duration of loans. It is worth noting, however, that the interest rates of banks may be adjusted to the benchmark rates of the People ' s Bank of China loans。

That's the details of how you calculated the interest on the mortgage over the 30-year period of $1 million, in the hope that this information will help you to better understand your loan scheme。