How is a monthly mortgage payment calculated?
The monthly mortgage payment is the fixed amount you pay the bank every month throughout the loan term. It includes both interest and a portion of the borrowed capital.
The calculation formula
Banks use the annuity formula to calculate the monthly payment. It divides the total repayment amount into equal instalments over the loan term. The formula takes into account: the loan amount (principal), the annual interest rate divided by 12 months, and the total number of months. At the start, a larger proportion of the payment is interest; over time, the principal portion gradually increases.
What affects the monthly payment?
The more you borrow, the higher the monthly payment. Loan amount = property value − down payment.
A lower rate means smaller monthly payments. Even 1 percentage point difference can save hundreds of MDL per month.
A longer term reduces the monthly payment but increases total interest paid. A shorter term raises the payment but reduces total cost.
With a fixed rate, the payment stays constant. With a variable rate, the payment may change based on the RDNA index.
Practical example
Loan of 1,000,000 MDL, 9% interest, 25-year term: the monthly payment is approximately 8,392 MDL. If you reduce the term to 20 years, the payment rises to ~9,000 MDL/month, but you save over 250,000 MDL in total interest. Use our calculator to experiment with different values.
What is total repayable?
Total repayable is the sum of all monthly payments over the full loan term: the borrowed capital plus all accrued interest. This is the real cost of the loan. For example, for the loan above (1M MDL, 9%, 25 years), the total repayable is ~2,517,600 MDL — nearly 2.5 times the borrowed amount.
Tip
Use our calculator and experiment with the loan term. Sometimes a small increase in the monthly payment can significantly reduce the total interest paid over the life of the loan.