How can I calculate...?

Supermop

Hi all,

I am looking to pay off a loan 5 years early, in January 2013. I was just wondering what the formula is for calculating the amount payable at that date? Sorry if I'm being a bit thick, I've tried it 3 ways and come up with different answers each time.

Thanks!

InsideInsurance

Quickest way is normally to phone them and they can calculate it for you.

The amount will depend on what the penalty clause is for early settlement

paddyrg

But generally speaking, as an estimation, you will save the compounded interest of the rest of the loan, but suffer a couple of months equivalent penalty charge. The last 5 years of a loan bear less interest than the first 5 years of course, so the saving whilst significant will not be as huge as you may think (thanks to the compounding nature of the interest). However, it will almost always be worthwhile :-)