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Mortgage Amortization Table -Converting Interest-Only to Interest and Principal Repayment

  1. 05-09-2013, 01:33 PM #1
    calgary is offline
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    Mortgage Amortization Table -Converting Interest-Only to Interest and Principal Repayment

    Hi,

    I am trying to create a model for a real estate development project whereby an interest-only loan is advanced during the construction phase and then converted to a permanent loan amortized over 20 years. Ideally, I'd like to create a model where there is an input where you enter the number of months you expect there to be interest-only payments, after which point principal and interest payments would begin. I also wanted to know how people model lump sum payments in a mortgage amort schedule (ie. you make a lump-sum paydown of xx dollars every year or so).

    Any guidance on best practices with respect to real estate development modeling would be greatly appreciated!!

    Thanks,

    JT
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  2. 05-09-2013, 02:21 PM #2
    Pauleyb is offline
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    Re: Mortgage Amortization Table -Converting Interest-Only to Interest and Principal Repaym

    I went here to get a snapshot of a loan: http://www.interest.com/mortgage/cal...an-calculator/

    The way it appears to work is that the back end of the loan (i.e. the one with principal and interest payments) is just a standard x-year loan where you can use the Excel PPMT and IPMT functions. In your case, that would be a 20 year loan using whatever interest rate you are charging. For the front end (the time that is interest only), you look at the IPMT for the first payment of the back end (i.e. the 20 year loan), and use that amount for their interest payment until they start paying principal.

    As for lump sum payments, I believe the principal in your xPMT calculations is adjusted by the extra payment. I didn't download this, but it may be helpful (lots of Excel loan calculators out there):
    http://www.vertex42.com/ExcelTemplat...-payments.html
    Pauley
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