Dont understand mortgage calculator..do u?

Mikejed

I was messing around on the BBC mortgage calculator and are now confused. If you put $100k, 25year term 5% rate you get $591.27 repayment $416.66 interst only.
Changethe rate to 50% (ok not gonna happen, but still) The repayment is $4166.83 and interest only $4166.66! Meaning you pay 17p more a month, $2.04/year or $51 over the term to repay to whole debt.
Make the rate 72% or more and both the payments are exactly the same.
Its not just the BBC one the does it, all i have come across do.

Whats going on? Is my logic wrong or can we not trust the mortgage calcs?

PS im not american, my keyboard has decided to do # instead of pounds.

hopeless_case_2

dont know about that one but try another calculator see what it comes up with.

bob2

Those calculations are correct.

If you'd like to understand how it works try messing around with a mortgage amortization spreadsheet.

E.g.

http://www.joecheng.com/amortization/

For extremely high interests rates the difference in payment will be < 1p so they will appear to be the same.

For 100,000 at 50% over 25 years on a repayment mortgage you'd start paying £4,166.67 interest and £0.02 capital. In the final month you'd be paying £166.67 interest and £4000.02 capital.

poppy10_2

This is why people on IO mortgages get hit particularly hard by interest rate rises.

hopeless_case_2

this made me have a think onmy own mortgage i owe 96000 and have 14 years left to go.I currently pay £800 on my repayment mortgage which is £70 more than i need to pay. Is it best to pay lump sums off or to pay a little extra each month?