Ooba Extra Payment Calculator

Extra Payment Formula:

\[ \text{New Balance} = P - \text{Extra} \] \[ M_{\text{new}} = \text{New Balance} \times \frac{r \times (1 + r)^{n_{\text{remaining}}}}{(1 + r)^{n_{\text{remaining}}} - 1} \]

Original Principal (P):

ZAR

Extra Payment Amount (Extra):

ZAR

Annual Interest Rate:

Remaining Months (n_remaining):

months

New Balance (Remaining Principal):

New Monthly Payment (M_new):

Unit Converter ▲

Unit Converter ▼

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1. What is the Ooba Extra Payment Calculator?

The Ooba Extra Payment Calculator helps homeowners calculate how making extra payments affects their mortgage balance and monthly payments. It uses ooba's tool methodology to determine the new monthly payment after an extra payment is applied to the principal.

2. How Does the Calculator Work?

The calculator uses the following formulas:

\[ \text{New Balance} = P - \text{Extra} \] \[ M_{\text{new}} = \text{New Balance} \times \frac{r \times (1 + r)^{n_{\text{remaining}}}}{(1 + r)^{n_{\text{remaining}}} - 1} \]

Where:

\( P \) — Original principal amount (ZAR)
\( \text{Extra} \) — Extra payment amount (ZAR)
\( \text{New Balance} \) — Remaining principal after extra payment (ZAR)
\( M_{\text{new}} \) — New monthly payment amount (ZAR)
\( r \) — Monthly interest rate (decimal)
\( n_{\text{remaining}} \) — Remaining number of months

Explanation: The calculator first deducts the extra payment from the principal, then recalculates the monthly payment based on the reduced balance and remaining term.

3. Importance of Extra Payment Calculations

Details: Making extra payments can significantly reduce the total interest paid over the life of the loan and help homeowners pay off their mortgages faster. This calculator helps visualize the impact of extra payments on monthly obligations.

4. Using the Calculator

Tips: Enter the original principal amount, extra payment amount, annual interest rate, and remaining months. All values must be positive numbers. The calculator will show the new remaining balance and recalculated monthly payment.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my mortgage?
A: Extra payments reduce your principal balance, which decreases the total interest you'll pay and may shorten your loan term.

Q2: Should I reduce my monthly payment or the loan term?
A: This depends on your financial goals. Reducing the monthly payment improves cash flow, while keeping payments the same shortens the loan term.

Q3: Are there penalties for extra payments?
A: Most South African mortgages allow extra payments, but check your specific loan agreement for any prepayment penalties or restrictions.

Q4: How often can I make extra payments?
A: This varies by lender. Some allow monthly extra payments, while others may have specific rules about frequency and amount.

Q5: Does the calculator account for interest rate changes?
A: This calculator assumes a fixed interest rate for the remaining term. For variable rate mortgages, consult with your lender for accurate calculations.