One of the payment method T-REX offers is Reamortized Scheduled Payments.
With Reamortized Scheduled Payments, the payment will be fixed for the periods defined under Months to Reamort column, then the payment will default to the Level Pay payment method. The interest is calculated regularly, and the principal will be the difference between the two.
Example:
Modeling one loan, with Scheduled Payment payment method.
- The loan’s balance is $1,000,000
- The interest is 5%
- Payment is set to $3,000
- Months to reamort is 10
- Amortization term 100
The Report:
Calculation
Set the Payment to $3,000 for the months before the loan reamortizes.
Calculate the interest based on the previous period’s ending balance. The interest grows in this case due to the growing collateral.
.
Calculate the principal by subtracting the interest from the total payment amount.
Subtract the principal amount from the collateral balance. In this case, the principal is negative as the PMT amount is less than the interest due.
On the period after the loan reamorts, in this case period 11, the loan will default to Level Pay payment period, and the PMT, interest, principal and collat will update accordingly.
See Level Pay tab for more detailed information.
Important to Note:
- The principal might show as negative, in case the payment amount is less than the interest due.
- In case the principal is negative, the collateral will grow for the periods before the loan reamortizes.