Mortgage Interest Question

giraffejoe

Hi,

I have a quick question about how I calculate my monthly interest rate on my mortgage.

The way that I have tried to do it is this

Remaining balance x Interest Rate % = yearly interest. Divide this by 365, and x by the number of days in the month.

I've tried to do this and apply it to past payments but the interest charged that I come to is a little out compared to what has been charged.

Any help? Cheers.

handytips

Contact your lender as you will need to know whether you are on Daily, Monthly or Annual interest.
but quick calc is this. amount owing X interest rate divided by 12 assuming daily interest.

TrickyDicky101

giraffejoe, ostensibly, your calculation is correct, assuming you are taking the outstanding balance at the start of the period you wish to calculate (your balance will fall on a monthly basis as you make payments). You can only calculcate from the end of one repayment to the next using this however, as your outstanding balance will change after each repayment and thus interest chargeable will change.

giraffejoe

Thanks for the responses my interest is calculated daily. So I don't understand why my calculation isn't correct.

TrickyDicky101

From what start date to what end date are you performing the calculation? What is the outstanding balance at the start and are any repayments made by you between start and end date?

malc_b

Your best bet is to ask your lender what the daily rate is and how the annual is worked out. Figures like APR can depend on when you make a payment (hence the reason for typical APR is...).

But don't assume the lender is right. My lender got calculations wrong which I had to take to the ombudsman. Even then the lender didn't seem to be able to grasp the issue but the ombudsman did and just told them to pay xx for my time and trouble.