Does paying the mortgage build equity for both of you?
Two people split a mortgage payment 65/35 because one earns more. Splitting the payment is not the same as splitting what the payment buys: every payment is interest, the charge for having the loan, plus whatever is left over to reduce the loan, and how it divides between those two moves with the rate and with how much of the term is left. Early in a long loan at the rates mortgages usually carry, most of it is interest. This page takes the payment apart from the real schedule, month by month, and shows how much of the loan each person’s money actually repaid over any stretch of payments, beside the share each person owns. That repayment is one half of equity; the other half is what the property is worth, which this page is not told and does not guess. Every line of the working is on the page. Nothing you type leaves your browser.
The deed and any agreement between you decide who owns what. This page changes neither: it divides the payments in the proportions you type and shows what each part of the money paid for. It says nothing about what anyone ought to pay, nothing about tax, and nothing about anyone’s rights.
The walkthrough is on. Each part says what its figures mean and where to find them. Turn it off at the top once you know your way around. The figures in the blanks are a worked example so the page shows a real result before you touch it; replace them with yours.
A
The loan
The loan as it started, not the balance today. Your offer or annual statement has all four figures.
Loan amount
The sum borrowed at the start, not the purchase price. The largest amount this page reads is a thousand million; anything above it is named and read as that.
Annual rate
The rate on the loan, as a percentage a year. A rate of zero is allowed and gives a straight-line repayment.
Term
The number of years the loan was set to run over. Thirty years is 360 payments.
Payments already made
How many monthly payments have gone out before the stretch you want to look at. Zero starts at the first payment.
%
years
payments
B
Who pays what, and who owns what
Two figures each, entered directly as percentages. No incomes are asked for anywhere on this page. This page takes two to six people; the hub calculator linked at the foot takes eight.
Share of the monthly payment
The proportion of the mortgage payment this person pays. If you split it 65/35, type 65 and 35.
Ownership share
The proportion of the property this person owns, as your deed or your agreement records it. This page reads it; it never sets it.
If they do not add to 100
Nothing is corrected silently. The page says so, and then divides in the proportions you typed.
Person
Name
Share of the payment
Ownership share
C
The stretch of payments to look at
Any number of payments, starting after the ones already made. Sixty payments is five years.
payments
D
The other monthly lines
Everything else that goes out monthly, each split by a rule you choose for that line. None of these repays the loan, which is why they sit apart from the mortgage line.
By ownership share
Split in the ownership proportions from part B.
Equal parts
Divided by the number of people, whatever anyone owns.
As the mortgage is split
Split in the payment proportions from part B.
E
One payment, taken apart
The monthly payment from the loan, the rate and the term, and then the split that every schedule uses: interest first, on the balance standing at the time, and whatever is left of the payment reduces the loan.
Interest for a month is the balance at the start of that month times the monthly rate, and the monthly rate is the annual rate divided by twelve. The rest of the payment comes off the balance. That is why the same payment repays more of the loan every month: the balance it is charged on is smaller.
The monthly payment in part A is the one figure that cannot be worked out by adding and multiplying: it is the payment that brings the balance to nothing in exactly the number of payments in the term, and the expression printed beside it is the formula that gives it. A payment is a whole number of cents or pence, so it is rounded to the cent or penny, and the last payment of the term is then whatever clears the loan.
F
What each person’s payments repaid
Over the stretch in part C: what each person paid in, how much of it was interest, and how much of the loan their money repaid.
G
Beside what each person owns
The share of the loan repayment each person’s money accounted for, next to the ownership share you typed in part B, and the gap between them in percentage points and in money.
These are two different things and the page keeps them apart. One is arithmetic on the payments: whose money reduced the loan, and by how much. The other is the ownership share your deed records. A gap between them is a fact about the payments, not a claim about what anyone is owed.
H
The whole monthly bill, line by line
Each line divided by its own rule, with each person’s total at the foot. Only the mortgage line repays any of the loan, and only part of it does.
I
The words on this page
Equity
What the property is worth, less what is still owed on it. This page is not told what the property is worth, so it does not work out equity. It works out the other half of that subtraction: how much of the loan each person’s payments repaid.
Interest
The charge for having the loan, worked out each month on the balance standing at the start of that month. It does not reduce the loan.
Principal
The part of a payment that reduces the loan. Also the word for the sum borrowed.
Amortisation
The schedule by which a loan is repaid in equal payments over a term. It is why the interest part of a payment falls every month and the principal part rises.
Balance
What is still owed. This page works it out from the loan, the rate and the term, so it may differ by a little from a statement that has had a fee or an overpayment on it.
Share of the payment
A proportion you type. This page divides the payment by it; it does not suggest one.
Ownership share
The proportion recorded in your deed or your agreement. An input here, never an output.
Percentage point
The unit of a difference between two percentages. Thirty-two per cent and fifty per cent are eighteen percentage points apart.
Cent or penny
The smallest unit of the currency you picked at the top of the page: the cent with dollars or with euros, the penny with pounds. Every amount on this page is rounded to that unit, and the sentences that say so name both; where a sentence counts them it says unit rather than picking one of the two names. The arithmetic is the same whichever currency you pick.
Rounding difference
When several amounts rounded to the cent or penny are added, the total can sit away from the figure they came out of, by up to half a cent or penny for each amount rounded: a unit or two where a few are added, more where many are. This page prints the difference rather than hiding it.
The figures print with it. Nothing is sent anywhere and nothing is saved except whether the walkthrough is on.