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Excel/Excel and Loan Payments

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QUESTION: I have an interest only loan on a HELOC. I would like to pay it down periodically but I am not sure how much principal I can pay periodically.

I would like to have an excel model that will determine the interest amount on the principal and then readjust each time I pay down the principal.

For example, the total debt is $20,000 payable over 7 years with a balloon payment due at the end for the remaining principal. For the first payment, the interest-only portion of the debt is $100 and I pay $200. Therefore the debt is now $19,900. For the second payment, the interest-only portion is $90 and I pay $150 or $60 in principal...and so on. I want to figure out what the interest only portion each time after the principal is adjusted.

Thanks,

Chris

ANSWER: Fairly straightforward I think

I'd put the following headings in place
Date
Capital
Interest
Amount Paid

In the first row, the capital is the initial capital ($20,000).  The interest is a formula

=capital * interestrate

(replace my words with cell references, or values)
The amount paid is typed ($200)

In the second and subsequent rows, capital becomes a formula

=PreviousCapital + PreviousInterest - PreviousAmountPaid


The interest formula is carried down from the first row, and assuming you want to keep the payments constant, the payment is a formula

=PreviousAmountPaid


Fill this down as much as you need and you will have a working model.  You can overwrite any payment formulas with values if you want to alter them at any time.

---------- FOLLOW-UP ----------

QUESTION: Is there a way to project what the interest payment will be based on the new principal amount? For example, if the principal is $20,000 and the first payment requires an interest due on the first payment is $100 and the payment is $200, the new principal for the second period is $19,900. What would be the second payment provided the interest rate is 4% annually and it is compounded daily?

Thanks,

Chris

Answer
it is doable - my financial skills may not be up to the task though!  different people seem to use different methods to get the interest rates - this page http://superuser.com/questions/352981/excel-formula-to-convert-per-annum-interes explains how to get a daily rate - as it's a daily rate, you can get the number of days by subtracting the previous payment date from the current one.  Excel does come with a lot of financial functions, though I've never used them!
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Aidan Heritage

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I have provided first hand support since `95 for Microsoft Office majoring in Word and Excel - support for all versions from 2 onwards. I'm based in the UK, so please allow for time differences when asking me questions from other parts of the world!

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