**Before you make a conversation with your bank agent concerning your interest in issuing a bond, it is essential to review the logistics behind the loan. It is also advisable to look around to see how different banks handle loan agreements. Consequently, a bond repayment calculator will come in handy if you want to choose an option among many. This way, you become more aware of the repayment process.**

Derived from the English word ‘bind,’ bond is a term that refers to the ‘instrument’ that binds one to pay some amount to another entity. Generally, when a borrower issues a bond, they require financing for forthcoming projects. The ‘instrument’ is issued to investors who would loan or finance the completion of the project. The bond repayment calculator provides the total amount of money paid at the end of the loan period.

## How do bonds work?

A bond can be viewed as a loan agreement between an investor and a debtor. For a home loan or mortgage, a person issues loan security. This type of loan is particularly specific to the purchase of properties.

A mortgage loan is secured by the property, meaning that the lender, i.e., the bank, has the right to seize the property in case there is a default in payment. As such, finding the cheapest rates will help you in finding the best loan offers that will help you in paying responsibly. Consequently, using a home loan calculator will help you make the right choice.

Typically, the holder of the bond (debt holder) is the creditor or lender while the issuer is the debtor or borrower. The details of the agreement include the amount loaned (principal), the maturity date (the date at which the principal has to be fully paid) as well as the fixed interest rates. The amount to be paid at each instalment and the time taken to complete the payment are also included.

## Bond repayment

Typically the plan to pay a loan is dependent on the interest rates set by different banks, as well as the time you will need to pay the loan. Different banks have different interest rates. Just like typical loans, these types of loans have interest rates as well as a time for loan maturity. Fixed interest rates are issued over a specific amount. Thus, the rate of interest will remain locked until the amount is fully paid.

Usually, the bond price is inversely proportional to the rate of interest. Consequently, when the price is high, the interest rate is lower and vice versa. These loans usually have maturity dates. At this point, the initial borrowed price (the principal) must be paid in full.

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## How do you calculate bond repayments?

Several methods are used in calculating repayments. Use a technique that you are most comfortable with to determine the best scheme.

### Home loan repayment calculator on a spreadsheet program

If you are well versed in spreadsheet programs, then this could be a smart way of calculating your loan repayments. Major spreadsheet programs include Apple Numbers, Google Spreadsheet Microsoft Excel. The function used in the calculation is PMT.

PMT combines all necessary information such as principal, the interest rates, and the number of periods. The most commonly used spreadsheet program is Microsoft Excel. So, what is the monthly payment formula?

To get your monthly payment, you input =PMT into the spreadsheet program. The program will require you to enter some details by showing the following: PMT (rate, nper, pv, [fv], [type]).

The rate stands for the interest rates, while nper refers to the number of periods. Pv is the present value or the principal. The rest of the values are left blank. When you press enter, the program will give you the amount in a negative value. The negative value is an indication that the interest is an expense.

### Home loan repayment calculator using a mathematical expression

The mathematical expression M=P {[r (1+r)n] / [(1+r)n-1]} can be used in determining repayment.

- M refers to the monthly instalments
- P is your present value or principal
- r refers to the interest rate per month
- n indicates the number of months you will require to complete the loan amount

All you have to do is to input the necessary information to determine the exact value of the monthly instalments.

**So, what is the mortgage payment on 1.6 million? **

To make a quick example, we could use $1.6 million as the principal. Let us assume the interest rate is 6% p.a, and the period is 10 years.

First, to get the monthly interest rate, you will have to divide 6% by 12 to get 0.005

To get the number of months, multiply 15 years by 12 to get 180

M = $1,600,000 {[0.005(1+0.005)180] / [(1+ 0.005)180-1]}

M = $ 13,502.40

### Online calculator

The digital age makes it easier to determine the monthly instalments of mortgages. Most banks offer bond repayment calculators at their websites. More so, these banks also offer bond repayment calculator extra payments that allow you to determine the changes in case your salary increases. Follow these links to find the individual bond calculators of different investors.

- Bond repayment calculator Absa
- Bond repayment calculator Standard Bank
- Nedbank calculator
- Ooba Group calculator
- Property 24 calculator
- First National Bank (FNB) calculator
- Private Property calculator
- Rawson Finance calculator
- My Property calculator
- Better Bond calculator

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All you have to do is to input the required details to determine what option(s) is best for you.

## How can I pay off my bond faster?

Paying a loan faster requires that you pay more monthly instalments than the initial plan. This way, you can return the interest as well as principal on an earlier date.

Having a bond repayment calculator will help you make the right choice when issuing a mortgage bond. Use these methods of calculation to secure the best loan option.

**DISCLAIMER:** This article is intended for general informational purposes only and does not address individual circumstances. It is not a substitute for professional advice or help and should not be relied on to make decisions of any kind. Any action you take upon the information presented in this article is strictly at your own risk and responsibility!

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