Question

# Dave has owned his condo for 10 years. He paid \$200,000 for the condo, and put...

Dave has owned his condo for 10 years. He paid \$200,000 for the condo, and put down 20%. The interest rate was 4% for a 30-year mortgage loan. What is his loan payoff amount in 2020?

Loan amount = 80% * 200,000 = 160,000, interest rate = 4%, term = 360 months

Monthly payment = - PMT(4%/12, 360, 160000) = \$763.86

Loan amortization table can be set up in excel as below

 Month Opening balance Interest paid Principal repaid Closing balance 1 160,000 533 231 159,769 2 159,769 533 231 159,538 121 126,054 420 344 125,711 132 122,210 407 356 121,854

Opening balance (from month 2) = closing balance of prior month, interest paid = interest rate x opening balance, principal repaid = monthly payment - interest paid, closing balance = opening balance - principal repaid

As seen in table above, opening balance after 10 years (month 121) = \$126,054

And closing balance at the end of 11th year (month 132) = \$121,854

Hence, loan repaid during the year = 126,054 - 121,854 = \$4,200.657

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