Is My Mortgage Repayment Correct ??

Mort_Gage

I've recently received my mortgage statement from Abbey along with my new interest rate from January....thought I'd check it using several online calculators & the spreadsheet written by Locoblade. Try as I might I can't seem to get my monthly repayment figures to equate to those sent by Abbey (the letter states I'll be paying £397.78 per month).

I'm pretty sure that I must be misunderstanding something so I'd be grateful if anyone can explain to me where I'm going wrong.

Mortgage Balance: £30,954.39
Interest Rate: 4.890% (this should be the Abbey SVR although it seems to be 0.05% lower than the 4.94% stated)
Term Remaining: 8 years (96 months)

Repayment mortgage, Abbey SVR.

Any help/suggestions appreciated. Thanks.

dimbo61

Just had a quick look at WHATS THE COST and put in abbey,s figures
£30954.39 at 4.89% over 8 years works out at £390.26 and you would pay £6510.67 interest
So is there anything else that abbey have added to make your payments £7.50 a month more ( insurance or fee !!)
Check with abbey,s mortgage centre

JayZed

I see what you mean, it does look as though you're paying about £7.67 too much. Do you have some kind of payment protection plan attached to your mortgage?

Mort_Gage

As far as I know there are no other charges on the account. Now that it appears that I'm not doing something foolish with the calculations I'll speak with Abbey and find out what they have to say. Thanks for your help.

Mort_Gage

I've now received a letter from Abbey "confirming the formula for calculation of monthly instalments for repayment mortgages".........

Monthly Repayment (R) = LQn(Q-1) / 12(Qn-1)

where:

L = balance outstanding (£30, 954.39)

I = Interest Rate (4.94%)

n = term remaining (8 years, or 96 months)

Q = 1+I / 100

I've used a spreadsheet to try to calculate my monthly repayment (£397.78) using the above equation but can't get the numbers to approach anything like my repayment value. Can anybody with a better grasp of mathematics shed any light on this matter ? Or should I just let this go and accept that my monthly payment is probably correct .

Mr._Nice

Using the same notation, it's

R=L(Q-1)/(1-e^nlog(Q))

If n, I and Q are all in months (ie, n=96, I=4.94/12)
log is base e (obviously ).

So eh? to what you quoted above.

I can get precisely 397.78 if I shorten the term to 94 months (£30,954.39 at 4.94%), so that seems to be the answer.

Mort_Gage

Thank-you for the explanation.

I was pretty sure that it was my lack of understanding rather than any mistake on the part of Abbey .

Trying_to_be_good

Now you know it's 94 months, it also means you can just use the PMT() function on Excel - again, make sure the Rate and Nper values are in months, not years and you get exactly £397.78. You can play to your heart's content, adjusting different variables!:j

Mr._Nice

Trying_to_be_good wrote: »

the PMT() function on Excel - again, make sure the Rate and Nper values are in months, not years and you get exactly £397.78.

Well that's no coincidence, how do you think I played with the parameters to end up with 94 months . Indeed I used the PMT function to check I remembered the long hand formula version correctly .

tartanterra

Mort_Gage wrote: »

Thank-you for the explanation.

I was pretty sure that it was my lack of understanding rather than any mistake on the part of Abbey .

You did the right thing, though!
It's always worth checking that your lender has got their sums right. I hope more people follow your example.:T