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.
This exercise is part of the course
Introduction to Financial Concepts in Python
Exercise instructions
- 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.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Calculate the amount of the first loan payment that will go towards interest
initial_interest_payment = ____
print("Initial Interest Payment: " + str(round(initial_interest_payment, 2)))
# Calculate the amount of the first loan payment that will go towards principal
initial_principal_payment = ____
print("Initial Principal Payment: " + str(round(initial_principal_payment, 2)))