Education Technology

# Knowledge Base

## Solution 12637: Calculating Mortgage Constants on a Financial Calculator.

### How do I calculate a mortgage constant on a financial calculator?

Mortgage constant is calculated by dividing the annual amount payable to the loan (interest and principal) by the original amount of the loan.

Only two figures are required to calculate the mortgage constant, the term and the interest. The original amount of the loan is immaterial to the calculation; thus, it should be set to an easy number to work with like '1'.

Refer to the steps below to calculate a mortgage constant:

• Calculate the payment for the loan by inputting the term, interest rate, and 1 for present value.
• Solve for the payment.
• Multiply the monthly payment by 12 to get the annual amount paid to the loan.
• Divide the annual amount paid by 1 to get the mortgage constant.

Note: Refer to the examples below for instructions on how to calculate payment on the financial calculator:

For more information on using financial calculators please see the financial calculator's guidebooks.