Suppose you have a 30 year S500000 mortgage with a rate of 45 ie 45 per year compoundedmonthly Using 100 PSA Public Securities Association Experience for month 1 the interest payment isS1875 the sched

), S83.30. The interest payment for month 2 can be calculated using the formula:

Interest payment = Principal outstanding * Monthly interest rate

Monthly interest rate = Annual interest rate / 12 = 4.5% / 12 = 0.375%

Interest payment = S499,258.27 * 0.375% = S1,871.48

However, since the prepayment is expected to be S83.30, the actual interest payment for month 2 will be:

Actual interest payment = S1,871.48 - S83.30 = S1,788.18

The scheduled principal payment for month 2 can be calculated using the formula:

Scheduled principal payment = Monthly mortgage payment - Interest payment = S1,875 - S1,788.18 = S86.82

Therefore, for month 2, the (expected) prepayment is S83.30, the interest payment is S1,788.18, and the scheduled principal payment is S86.82