Question

caleb secures a $350,000 mortgage with a 30-year repayment term and an annual interest rate of 6%. if he makes monthly payments, how much total interest will caleb have paid on the mortgage at the end of 25 years?

Answer 1

To calculate the total interest paid on a mortgage, use the formula for the monthly mortgage payment and subtract the original loan amount.

Step-by-step explanation:

In order to calculate the total interest Caleb will have paid on the mortgage at the end of 25 years, we need to use the formula for calculating the monthly mortgage payment.

The formula is:

Monthly Payment = P * r * (1 + r)^n / ((1 + r)^n - 1)

Where:

• P = Loan amount = $350,000
• r = Monthly interest rate = Annual interest rate / 12 = 6% / 100 / 12 = 0.005
• n = Total number of payments = Years * 12 = 25 * 12 = 300

Substituting the values into the formula, we get:

Monthly Payment = $350,000 * 0.005 * (1 + 0.005)^300 / ((1 + 0.005)^300 - 1)

Solving this equation will give us the monthly payment.

Multiplying the monthly payment by the total number of payments will give us the total amount paid. Subtracting the original loan amount from the total amount paid will give us the total interest paid.