mortgage calculations

mick_1967

eg: if you had a 110000K mortgage at 6% it would bde approx £550 on an interest only but on a repayment it would be £xxx.xx? how do you calculate the repayment figure?

Kittikins

Hi Mick, I'd suggest using the FSA website mortgage calculator, you put in the size of mortgage, interest rate and number of years left to run and it shows both interest-only and repayment figures.

http://www.moneymadeclear.fsa.gov.uk/tools.aspx?Tool=mortgage_calculator

mick_1967

cheers.

it works out at 550 interest only and 708 on repayment, as I said I can work out the int only but wondered how I can do the calulation without using the tool ie: via a calculator

Cozworth806

Tricky, as it is not a straight calc of £110000 divided by monthly payments as the interest and capital split will vary through the term.
In your example you would be paying £158pm capital at the beginning but at the end it would increase substantially.

With daily interest as well it becomes nigh on impossible.

Mr._Nice

Cozworth806 wrote: »

With daily interest as well it becomes nigh on impossible.

Well mortage companies calculate the fixed monthly payments on a repayment mortgage by assuming equal length months (and worry about the few pence difference this adds up to over the lifetime of the mortgage at the end), so it's not really an issue.
Anyway, technically the formula is:

Monthly payment= Pi/(1-e^-mln(1+i))

Where P is the principal, the initial mortgage amount, i is themonthly interest rate (ie, 1/12 of the annual rate), and m is the term of the mortgage in months.

In excel, you can use the pmt function, so monthly payment is

=pmt(i, m, P)