Manually calculating mortgage repayments

Busa

Thanks Jimmy - i'll bear all that in mind - and that's very useful info!

BTW mortgage calculators generally over state my current monthly repayments by a consistent £20 - as suggested by Goldiegirl.

But I guess I'm actually wanting to be one of those pains in the !!!! that Goldiegirl mentioned :beer:

Presumably that means all the repayment calculations are more or less automated these days Goldiegirl? Which does beg the question why the banks don't simply include the detailed calculation and send along with each statement, so [STRIKE]control freaks[/STRIKE] prudent customers like me can claw their way through it at their leisure.

I feel another call to my lender coming on

getmore4less

The calculations are not complicated they are standard math that have been around for years.

The key is understanding a bit about geometric progressions pretty basic maths

They are built into the spreadsheet apps anyway so easy to use.

Plenty of places on the web do walkthroughs of the calcs from basic sequence.

zagfles

See http://en.wikipedia.org/wiki/Mortgage_calculator#Monthly_payment_formula

In the old days lenders tended to recalculate annually so interest was paid on the amount at the start of the year for the whole year, but these days I think most/all do it monthly. So shove monthy rates into the figures (note that the monthly rate is usually the quote annual rate divided by 12 - ignore the APR).

So as an example, if you have £40,000 remaining, 12 years remaining, 3.59%:

12 years = 144 months, so N =144.

3.59% = 0.29916667% per month, so r = 0.00299166667

Shove those numbers into the formula:

0.00299166667 * 40000 / (1 - 1.00299166667^-144) = 342.30

Goldiegirl

Busa wrote: »

Thanks Jimmy - i'll bear all that in mind - and that's very useful info!

BTW mortgage calculators generally over state my current monthly repayments by a consistent £20 - as suggested by Goldiegirl.

But I guess I'm actually wanting to be one of those pains in the !!!! that Goldiegirl mentioned :beer:

Presumably that means all the repayment calculations are more or less automated these days Goldiegirl? Which does beg the question why the banks don't simply include the detailed calculation and send along with each statement, so [STRIKE]control freaks[/STRIKE] prudent customers like me can claw their way through it at their leisure.

I feel another call to my lender coming on

Repayment calculations have been done by computer since there was a computer available to the lender that was capable of the job.

I think the reason that the detailed calculation is not sent to the customer each time the monthly payment changes (which could be several times a year) is twofold.

Firstly, the average customer wouldn't be able to make head or tail of it. Take zagfles' straightforward example. The vast majority of people will just see figures dancing on the page, and will either simply not understand, or can't be bothered to look at it enough detail to try and understand. Add on all the other variables - such as different parts of the mortgage being over a different term, different interest rates, part of the mortgage being on repayment and the rest being on interest only, etc, etc it'd be a huge calculation to show.

The other factor is the cost. It'd cost money to produce the calculation, and somebody would have to pay. Of course, the poor old customer always ends up paying, and I can't see it being very popular with the majority when they have to pay an extra percent on their interest rate or the fees go up to cover the cost of a small minority who'd like to see how their monthly payment was calculated.

getmore4less

Busa wrote: »

BTW mortgage calculators generally over state my current monthly repayments by a consistent £20 - as suggested by Goldiegirl.

You need to use the numbers used by the lender the last time they calculated your payment

What are your numbers and what payment do they calculate.

can probably reverse engineer what they used at the time.