How to calculate a mortgage

A fixed-rate mortgage payment has two parts: the principal share (the part that reduces the amount you borrowed) and the interest share (the cost of borrowing the money). Their balance shifts over time: in the early years a larger share goes to interest, then the ratio flips as the term nears its end. Payments do not include insurance, monthly charges or property taxes unless you add them to the fees. Keep that in mind when budgeting.

The actual loan amount is the property price minus the down payment, and interest is charged on that amount, not on the price. If a property costs 1,000,000 riyals and you put down 200,000, the loan is 800,000 and all figures are based on it. A bigger down payment lowers the monthly payment and total interest, but it ties up cash you may need as a buffer or for moving and furnishing costs. Balance lower payments against keeping a financial safety margin.

Payments use the fixed-rate annuity formula: convert the annual rate to a monthly rate by dividing by 12, convert the term to months, then apply: monthly payment = loan amount × monthly rate × (1 + monthly rate)^months ÷ ((1 + monthly rate)^months − 1). The calculator runs this formula for you and records in the annual schedule how each year splits between principal, interest and remaining balance.

Using the same values as the calculator: a 200,000 dinar property with a 40,000 dinar down payment, at 5% per year for 20 years, with 1,000 dinars in fees. The loan amount is 160,000 dinars, the monthly payment about 1,056 dinars, total interest about 93,416 dinars, and the effective total cost (payments + down payment + fees) about 294,416 dinars.

The table shows, for each year: the amount paid, the principal share, the interest share, and the balance after that year. You will see interest fall each year while the principal share rises. Use the table to see when your balance drops quickly and to understand how much of your payments is actually interest — useful when comparing financing offers.

The calculator assumes a fixed interest rate for the whole term and regular monthly payments. The down payment and fees are added to the total cost, and insurance, late fees or early-repayment charges are not included. Results are estimates and do not cover exchange-rate changes or local regulations. Always check the contract terms with the lender before deciding, and seek professional advice when in doubt.