Loan repayments to Father?

andreweastell

My Father has loaned me £42,000. We have agreed an interest rate of 5%. How do I work out the monthly interest payments?
Thanks in advance.
Andrew

silvercar

are you paying the interest and capital back or do you want the interest and capital to be paid out in one payment. the interest only would be 42,000 x 0.05 / 12 = £175 per month.

if you want a caluclation that includes repayment of the £42,000 then use one of the mortgage calculators - egg do a good one here:

http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html

over 20 years the repayments should be £277, over 10 years £455 and 5 years is £793.

andreweastell

silvercar wrote:

are you paying the interest and capital back or do you want the interest and capital to be paid out in one payment. the interest only would be 42,000 x 0.05 / 12 = £175 per month.

Thanks silvercar
It is the interest only.
Thank you so much for your help.
Andrew

andreweastell

If anyone else agrees with silvercar, please can you post it here as I would like to show these replies to my Father. It can be awkward lending money from family.
Cheers
Andrew

margaretclare

Hi

If it's simple interest, then you just work out 5% of the loan amount - that gives you the interest due for a year. Then you just divide it by 12 giving the monthly amount.

Loan = £42,000 divided by 100, that gives you £420 which is 1%, multiply that by 5 to give you 5% = £2100. Divide that by 12 = £175 a month.

HTH

Margaret

rjm2k1

http://www.whatsthecost.co.uk/loan.aspx

silvercar

rjm2k1 wrote:

http://www.whatsthecost.co.uk/loan.aspx

if your using that link you need to click the "mortgage" and "interest only" tabs to get to the payments you need.

tyllwyd

It's a substantial amount of money, and I assume that because you are paying interest only, you are not intending to repay the capital? If I were you, I'd go to see a solicitor and get a proper agreement drawn up etc, because if the worst happened and your father passed away, you need to be sure that you won't need to immediately repay the money or that there won't be problems with inheritance tax etc.