Why do First Direct repayments differ to mortgage calculator's ?

Crinz

Have you done your calculation for 365 days of interest in the year? If so then you need to factor in the extra day of interest every 4 years.

I had a customer with the exact question and he was out by abount £1 a month and it came down to the extra days interest in leap years

bluesofa_2

Many thanks for the suggestions. Both seem reasonable. I will wait until my mortgage is drawndown to see if GMS is correct. In the meantime I've tried various approaches considering the 5660 days in the 186 months of payments over 15.5 years, but still haven't found one which gives me a monthly payment of £1094.34 on a mortgage of £171,000 with a given interest rate of 2.29%. Any help in doing the maths would be appreciated.

CLAPTON

just to add
if 2.29% is apr then the monthly rate of interest is NOT 2.29%/12 but = (1+2.29%) ^(1/12) - 1
where ^(1/12) to the one twelfth power of

bluesofa_2

Unfortunately the APR is only quoted to 1 decimal place as 2.3%
While the 'variable rate' is quoted to 2 decimal places as 2.29%

Using your formula to estimate the true monthly interest:
(1+APR) = (1+monthly interest rate)^12

And Excel PMT function to estimate the monthly payment, or if you prefer:
PMT = amount borrowed x monthly interest rate / [1-(1 + monthly interest rate)^-number of periods]
PMT = 171,000 x monthly interest rate / [1-(1 + monthly interest rate)^-186]

Then an APR of 2.29% gives a monthly payment of £1091.12
A nominal rate of 2.29% (monthly rate of 2.29%/12) gives a monthly payment of £1093.02
An APR of 2.3311% gives the quoted monthly payment of £1094.34
And I still can't work out where the 2.29% comes in.

I will see if the difference it is due to an assumed drawdown date.

Alternatively, I'm very open to other suggestions to rework the 2.29% to a rate that will give a monthly payment of £1094.34