1. What is a Home Loan Lump Sum Repayment Calculator?

Definition: This calculator determines how a lump sum payment affects your home loan term by calculating the new remaining term after the payment.

Purpose: It helps homeowners understand how extra payments can reduce their loan term and save on interest.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• New Term — Remaining loan term in months
• Balance — Current loan balance ($)
• Lump — Lump sum payment amount ($)
• Rate — Monthly interest rate (decimal)
• EMI — Monthly payment amount ($)

Explanation: The formula calculates how many months of payments are needed to pay off the reduced balance at the current payment amount.

3. Importance of Lump Sum Repayment Calculation

Details: Making lump sum payments can significantly reduce your loan term and total interest paid, helping you become debt-free faster.

4. Using the Calculator

Tips: Enter your current loan balance, lump sum payment amount, monthly interest rate (divide APR by 12), and your regular monthly payment.

5. Frequently Asked Questions (FAQ)

Q1: How does a lump sum payment affect my loan?
A: It reduces your principal balance, which either shortens your loan term (if payments stay the same) or reduces future payments.

Q2: What's a typical monthly interest rate?
A: For a 6% APR loan, the monthly rate would be 0.005 (6%/12). Always convert annual rates to monthly decimals.

Q3: Can I make multiple lump sum payments?
A: Yes, you can recalculate after each payment to see the cumulative effect on your loan term.

Q4: Does this account for interest rate changes?
A: No, this assumes your interest rate and monthly payment remain constant after the lump sum payment.

Q5: How accurate is this calculation?
A: It provides a good estimate, but your lender's specific terms may cause slight variations.