Calculating first month's interest

messery

Hello all,

We're exchanging contracts tomorrow and have an Alliance & Leicester mortgage, and we were wondering if anyone could shed any light on how they calculate our first month's payment.

I know it includes interest from when we move in and a full month in advance, but was wondering if anyone can tell me how to work it out specifically?

Thanks in advance,

Martyn

Comyface

Right, dredging my memory now! Here goes.

Your initial interest should be A-B, where:

A = £loan amount * (number of days to the end of the year/number of days in the full year) * interest rate%

B = £loan amount * (number of full months to the end of the year/number of months in a year) * interest rate%

This calc worked for my Halifax mortgage. You do need to know the 'mortgage year' your lender uses, Halifax is 1st Feb to 31st Jan.

Eg. I completed on 28th June (the other year), borrowing £84k at 6.09%.

A = £84,000 * (218/365) * 6.09% = £3055.34
B = £84,000 * (7/12) * 6.09% = £2984.1

My initial interest (which I paid with my first payment was £71.24.

A&L should be able to tell you their mortgage year. Hope this makes sense (and works!)

kforshaw

Also, as a vague guide you could use http://www.hughchou.org/calc/mort.html to work out how much per month goes towards interest in the first payment (I appreciate you'd still have to work it out for a daily interest figure)


On the form:
Change the Principal Loan Balance to your mortgage amount.
Input your Mortgage rate in the Annual Interest Rate.
Amortization length is your mortgage term.
Input month start.
Show Amortization table to Yes.
Then Calculate.

I appreciate it shows in dollars - but I find it a really good tool and it's nice to see the interest/repayment figure getting even for me!