working out monthly interest?

kymrob

can anyone tell the way i work it out?

Froggy-G

Hi :j

Take your outstanding mortgage, divide it by 100, multiply by interest rate, then divide it by 365, then multiply by the number of days in the month

Hope this helps

Froggy

kymrob

im trying to work out a plan! :j
i pay £209 a month
£100 overpay each month
10% lump sum each jan
i have £18500 left to pay come jan 2012

im trying to work out how much interest i pay each month
and how long it will take to pay off if i carry on as above !:j
i keep getting around £10 a month interest but i know that not right
once i know what im doing im going to do a month to month break down

FATBALLZ

Balance X (interest rate/100) /12

kymrob

why times by 100?:o
i worked out to b £78
does that seem right?

FATBALLZ

kymrob wrote: »

why times by 100?:o
i worked out to b £78
does that seem right?

If your interest rate is about 5% then yes.

You divide by 100 because you need to express the interest rate as a decimal. Eg 1% is one hundredth of a whole, and 0.01 is one hundredth of 1. To get from 1 (percent) to 0.01 (as a decimal) you do 1/100.

LilB_3

Froggy-G wrote: »

Hi :j

Take your outstanding mortgage, divide it by 100, multiply by interest rate, then divide it by 365, then multiply by the number of days in the month

Hope this helps

Froggy

I was quite enjoying being ignorant to my daily interest

Lois_E

It's slightly more complicated if (as is usually the case) the interest is compounded monthly. What you really need is
((100 + IR)/100)^(1/12)-1. That will give you a fraction that you can multiply your balance by to find your monthly interest. That's if your monthly interest is the same for all months. It would be slightly different if you have the kind that calculated daily so it will be different for 31 day months from 30 day months.