Monthly amortization calculator for Philippine home loans

Philippine banks and Pag-IBIG use the standard annuity formula: M = P x r(1+r)^n / ((1+r)^n - 1), where P is the loan, r is the monthly interest rate, and n is the number of months. For a ₱3,000,000 loan at 7.5% per year over 20 years: the monthly rate r is 7.5% / 12 = 0.6250%, and n is 20 x 12 = 240 months. That gives a monthly amortization of ₱24,168. Over the full term you repay ₱5,800,271, of which ₱2,800,271 is interest. In total you repay ₱1.93 for every ₱1 you borrow (the ₱1 itself plus ₱0.93 of interest).

Far more than most borrowers expect, and it changes over the life of the loan. On the same ₱3,000,000 loan at 7.5% over 20 years, the very first payment of ₱24,168 splits into ₱18,750 of interest and only ₱5,418 of principal. Across the whole of year 1 you pay ₱290,014, of which ₱222,718 is interest and just ₱67,296 comes off the balance. By year 15 the split has flipped: ₱98,334 interest against ₱191,680 principal. The crossover, the first month where more of your payment goes to principal than to interest, falls at month 130 (year 11).

Any peso you pay above the amortization goes straight to principal, which removes all the future interest that principal would have accrued. On the ₱3,000,000 example, an extra ₱5,000 a month saves ₱980,504 in interest and clears the loan 6.2 years early. Using your 13th-month pay instead, one extra amortization every December, saves ₱480,607 and finishes 3.0 years early, for money you were not counting on monthly. One caveat. Some banks charge a prepayment penalty during the fixed-rate period, and the terms vary by lender. Pag-IBIG allows prepayment anytime with no penalty. Check your loan agreement before paying extra.

A Philippine bank housing loan is quoted with a fixing period: the number of years your rate is locked for. Banks offer a range of them, commonly from 1 year up to 10, 15 or 20, and the shorter the fixing the lower the rate you are quoted. When the fixing ends, the bank reprices the loan to prevailing rates and recomputes your payment on the balance you still owe over the term you have left, which is why the fixing period you choose matters as much as the rate itself. On the ₱3,000,000 example fixed at 7.5% for 5 years, repricing to 9.5% lifts the monthly payment from ₱24,168 to ₱27,224. Here is the part nobody tells you: because the new payment is computed on your remaining balance, paying extra BEFORE the fixed period ends lowers it. Paying ₱5,000 extra a month for those first 5 years brings the repriced payment down to ₱23,437, a smaller shock for the same rate.

The amortization is not the whole monthly bill. Expect mortgage redemption insurance (MRI) and fire insurance, which are usually collected with the amortization and vary with the outstanding balance, the borrower's age, and the insurer. On top of that are one-time costs at the start: processing and appraisal fees, documentary stamp tax, notarial fees, and registration with the Registry of Deeds. These are set by the lender and by statute, not by this calculator, so confirm the exact figures with your lender and see the transfer tax calculator for the government charges on the sale itself.