Help With How Natwest Calculate Interest On My Fixed Rate

mark_curd

Hello All,

So we had our first annual mortgage statement at the end of last year. I was recently looking over some of the details when I made repayments and what interest they added and it interested me to try and calculate how they know what interest to charge each month.

After lots of reading and searching I was confident that I could work it out. Anyhow I keep getting stuck and can only do the first month and after that nothing really makes much sense.

If some could point me in a good direction that would be great.

Here are some details:

Original principle amount: £121000
Annual interest rate: 5.99%
Interest is calculated daily and added monthly and as far as I'm aware compounded
Start date of mortgage was 30th Sept 2009

Payment as follows:

29/10/2009 - Interest - £595.72
05/11/2009 - Repayment - £689.12
27/11/2009 - Interest - £615.78
07/12/2009 - Repayment - £689.12
29/12/2009 - Interest - £595.69
05/01/2010 - Repayment - £689.12
29/01/2010 - Interest - £614.93
05/02/2010 - Repayment - £689.12
26/02/2010 - Interest - £594.27
05/03/2010 - Repayment - £689.12
29/03/2010 - Interest - £574.27
06/04/2010 - Repayment - £689.12
29/04/2010 - Interest - £613.60
05/05/2010 - Repayment - £689.12
28/05/2010 - Interest - £593.23
07/06/2010 - Repayment - £689.12
29/06/2010 - Interest - £612.84
05/07/2010 - Repayments - £689.12
29/07/2010 - Interest - £592.39
05/08/2010 - Repayments - £689.12
27/08/2010 - Interest - £611.73
06/09/2010 - Repayment - £689.12
29/09/2010 - Interest - £611.45

Like mentioned I can do the first one. £121000 * 0.0599 (5.99%) / 365 * 30days = £595.72 perfect.

My understanding how to calculate the second is.......

Original principle £121000 + the interest of £595.72 - repayment of £689.12 * 0.0599 (5.99%) / 365 * amount of days in that month.

As the interest in calculated on a daily basis there are a few days between the interest being add and the repayment be deducted, so I know I need to include my working out with this also.

So the above understanding would now be.

Working out the 5 days between 31/10/2009 (end of month) and 05/11/2009 (repayment made) = Original principle £121000 + the interest of £595.72 - repayment (£0) * 0.0599 (5.99%) / 365 * 5 = £99.78

Next I need to do calculate the days after which I made a repayment 06/11/2009 to 30/11/2009 = Original principle £121000 + the interest of £595.72 - repayment of £689.12 * 0.0599 (5.99%) / 365 * 24 = £476.21

Then add both up = £575.99 which is not right!

I also have tried it taking into account that I may need to be one month in arrears for the interest plus I get confused if I need to include all the days in that month or just the days between the date when the interest has been added to the account and the repayment deducted.

Sorry for the long post, I would appreciate if someone could give some pointers as to how to do it. I will keep trying to see if I can do it.

Thanks

JSR

You don't pay interest on interest. Also the interest is charged for the whole calendar month not just up to the date it becomes due.