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Mortgage Calculation

Hi all

I have an interest only mortgage with Northern Rock for £63220 over 25 years. The rate is 4.69%.

They have sent me their formula for calculating the monthly payment which I can not understand:

B=Balance
R= Rate/12
VG = 1/(1+R)

This gives montly payment = (£63200 * 0.0469/12) * (1/(1+(0.0469/12)))

=£246.13

However, I do understand the meaning of the above formula.

I can not understand why they do not use the formula B*R

which gives: £63220 * 0.0469/12 = £247.09

Can anyone shed some light on this?

Many thanks indeed!
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