The monthly payment for a fully amortized loan can be calculated using the loan amortization formula:

$M = P \frac{r(1 + r)^n}{(1 + r)^n - 1}$

where:

• $M$ is the monthly payment,
• $P = 304,000$ is the principal loan amount,
• $r = \frac{2\%}{12} = \frac{0.02}{12}$ is the monthly interest rate,
• $n = 25 \times 12 = 300$ is the total number of payments.

Now, let's calculate $M$. Given data P = 304000 # Principal loan amount annual_interest_rate = 0.02 # 2% annual interest rate monthly_interest_rate = annual_interest_rate / 12 # Monthly interest rate n = 25 * 12 # Total number of payments (25 years * 12 months)

Loan amortization formula

M = P * (monthly_interest_rate * (1 + monthly_interest_rate) ** n) / ((1 + monthly_interest_rate) ** n - 1) MThe monthly repayment amount should be $1,288.52 to fully amortize the loan at the end of 25 years.

Would you like a breakdown of the calculation?

Here are some related questions:

1. What happens if the interest rate increases to 3%?
2. How much total interest will the Flemings pay over 25 years?
3. How much of the first payment goes toward interest versus principal?
4. What would the monthly payment be if the loan term was only 20 years?
5. How does the loan balance decrease over time?

Tip: Making extra payments towards the principal can significantly reduce the total interest paid over the life of the loan!