datacamp-logo
Session Ready
Exercise

Calculating Interest and Principal Payments

Due to the size of the mortgage loan, you begin the mortgage in the initial period by paying mostly interest and retaining very little principal, or equity that goes towards the ownership of your home.

This means that if you were to stop paying your mortgage and sell your home after only a few years, the bank would actually own most of the home because what you paid was mostly interest, and very little principal.

mortgage_loan, mortgage_rate_periodic, and periodic_mortgage_payment from the third exercise are available for use.

Instructions
100 XP
  • Calculate the amount of the first loan payment that will go towards the mortgage interest based on the mortgage rate.
  • Calculate the remaining amount of the first loan payment that will go towards the mortgage principal.