Im probably missing the point but can you explain exactly what the present worth figure tells you as the average mortgage payer? I can see why you might want figures to compare the amount of interest saved on overpayments against the amount you'd earn by putting that money into savings, is that effectively what you mean?
There's no huge changes in this one, Ive just added early repayment charges (ERC) and exit fees into the equation so you can see the complete cost when considering remortgaging again.
Im probably missing the point but can you explain exactly what the present worth figure tells you as the average mortgage payer?
I'm just trying to get a handle on how much the mortgage costs overall, in "today's money". What I mean is, if prices and wages generally increase each year, then £100 in 20 years time will be "worth" less than £100 now (I guess it'll be a smaller proportion of my wages then, and would buy less than £100 will today). If inflation is high enough, then £100 in 20 years time could easily be worth less than £50 today.
For instance, £600 each month for the next 15 years (£108,000 in total), might buy the same number of loaves of bread (or pints of milk) as £400 each month for the next 25 years (£120,000 in total). In that case, I'd tend to think of a mortgage at £600 a month for 15 years as the same cost as a mortgage for 25 years at £400 a month, even though the second one "looks" like it costs £12,000 more! (The payments on both would buy the same amount of bread or milk...)
I can see why you might want figures to compare the amount of interest saved on overpayments against the amount you'd earn by putting that money into savings, is that effectively what you mean?
I think that's one of the two suggestions on the online calculator that I mentioned (their description '(B)'), but I was more thinking about allowing for inflation (their description '(A)').
Yup it makes sense now, I think it would need a fair bit of calculation to get it working though. If I could be convinced that it would be of interest to others as well as you I'll put it on the list to look at, but Im not entirely sure many would have a need for that information or know how to interpret it?
finally figured out how to nominate this post for the 'post of the month award' and have nominated this thread for the award. see link i do hope anyone who found the calculator saved them money and time would spare a few seconds to nominate his post for the 'post of the month award for september'
... If I could be convinced that it would be of interest to others as well as you I'll put it on the list to look at, but Im not entirely sure many would have a need for that information or know how to interpret it?
Thanks Locoblade.
I'd have thought that most people would understand figures in "todays" money easier than in "future" money -- for instance, if someone said your pension in 40 years time could be £50,000 per year (!yippee! - sounds great!), but that was equivalent to £10,000 in todays money, which do you think most people would find easier to interpret?
When you add up the cost savings from overpayments by just summing all payments, then the total is a mixture of "todays" money and "future" money. I really find that quite hard to interpret, myself!
Dave, I'll give it a go and see how it goes, I can see the logic / benefit of knowing that info, just needs to be presented in a way that doesn't confuse more than it enlightens
Replies
Im probably missing the point but can you explain exactly what the present worth figure tells you as the average mortgage payer? I can see why you might want figures to compare the amount of interest saved on overpayments against the amount you'd earn by putting that money into savings, is that effectively what you mean?
cheers
http://www.locostfireblade.co.uk/Downloads/Mortgage%20Schedule%20Calculator%20v1.3.xls
There's no huge changes in this one, Ive just added early repayment charges (ERC) and exit fees into the equation so you can see the complete cost when considering remortgaging again.
I'm just trying to get a handle on how much the mortgage costs overall, in "today's money". What I mean is, if prices and wages generally increase each year, then £100 in 20 years time will be "worth" less than £100 now (I guess it'll be a smaller proportion of my wages then, and would buy less than £100 will today). If inflation is high enough, then £100 in 20 years time could easily be worth less than £50 today.
For instance, £600 each month for the next 15 years (£108,000 in total), might buy the same number of loaves of bread (or pints of milk) as £400 each month for the next 25 years (£120,000 in total). In that case, I'd tend to think of a mortgage at £600 a month for 15 years as the same cost as a mortgage for 25 years at £400 a month, even though the second one "looks" like it costs £12,000 more! (The payments on both would buy the same amount of bread or milk...)
Does that make sense?
I think that's one of the two suggestions on the online calculator that I mentioned (their description '(B)'), but I was more thinking about allowing for inflation (their description '(A)').
Yup it makes sense now, I think it would need a fair bit of calculation to get it working though. If I could be convinced that it would be of interest to others as well as you I'll put it on the list to look at, but Im not entirely sure many would have a need for that information or know how to interpret it?
cheers
Thanks Locoblade.
I'd have thought that most people would understand figures in "todays" money easier than in "future" money -- for instance, if someone said your pension in 40 years time could be £50,000 per year (!yippee! - sounds great!), but that was equivalent to £10,000 in todays money, which do you think most people would find easier to interpret?
When you add up the cost savings from overpayments by just summing all payments, then the total is a mixture of "todays" money and "future" money. I really find that quite hard to interpret, myself!
many thanks.
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