|★ APPLICATIONS ★ BUREAUTIQUE ★ Interest Rates ★|
|Interest Rates (The Amstrad User)||Applications Bureautique|
Petr Lukes provides us with a simple listing to prepare a mortgage repayment schedule.
Unless It is situated on top of an eroding cliff, real estate (land and its improvements) Is a good security for borrowing money. Lenders arc prepared to grant long term loans on it, at interest rates considerably lower than those demanded for vulnerable items such as cars.
First mortgage loans ore made on the reducible rate terms, with interest being charged only on the actual outstanding amount in any one payment period. The principal and interest are repaid by equal Instalments (unless the interest rates change) over the life of the loan. (Bridging and second mortgage loans may be a different matter).
The repayments early in the life of the loan cover little more than the interest on the outstanding debt. Many a borrower gets an unpleasant surprise when paying out the loan early: the reduction of the principal owing may be a little more than the cost of establishing the loan. The longer the term of the loan, the lesser the proportion of each Instalment going towards reducing the debt.
The program prepares a repayment schedule for a given amount. Interest rate, and length of the loan. It assumes a constant interest rate, no late payments, and no extra reductions of capital: not a very realistic assumption, but any variations can be handled by treating each variation as a separate loan. The schedule splits each Instalment into the capital and interest components, shows the balance owing at the moment the payment is made, and keeps a running total of interest paid to date. The limited accuracy of 6/7 significant digits produces some discrepancy in the totals, but it should not bt great for the normal range of loans (it cannot cope with a 99 year loan at 110%).
The most complicated part Is formatting the display, quite Important for any business-type program. With the exception of using a window to hold the column headings (not essential), the program Is non-specific BASIC. The computations would benefit from double precision arithmetic which is available in most versions of BASIC, but not on the CPCs.