What is the difference between these two mortage calculators?

Ok i have two mortgage calculator web sites.

http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml#your_results

http://www.mortgages.co.uk/calculator/mortgage_calculator.html

When i input the same values, i get a different answer. The one from BBC is slightly higher. Is this because it uses compounding and the other one doesn't. I am just curious to find out. Any help is welcomed.

Example
Amount: £20,000
Repayment Period: 5 years
Interest Rate: 8%

BBC Result:
Repayment Mortgage: £417
Interest Only: £133.33

Mortgages.co.uk Result:
Repayment Mortgage: £405.53
Interest Only: £133.33


Thanks in advance,

Replies

  • Leon_WLeon_W Forumite
    1.8K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    Forumite
    Hi Hus

    The interest only figures are correct.

    Repayment is a little more complex.

    By my reckoning the BBC are calculating the interest on their calculator ANNUALLY which comes out at £417.42 by my calcs.

    Mortgages.co.uk are calculating the interest MONTHLY. My calcs are £405.54.

    Most lenders actually calculate the interest DAILY. This would equate to a monthly payment of £403.02.

    If nothing else, it just goes to show that the headline interest rate is not the be all and end all of it ! Of course, any good broker would know this :beer:
  • Thank you very much for your kind help. I would also like to ask one final question if i may. Which one do you think gives the right answer and should be trusted? I would think the BBC's calculator is bad for the borrower, good for the bank. I'm not sure, i am just interested in what you would recommend?
  • Leon_WLeon_W Forumite
    1.8K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    Forumite
    The fact is none of them are wrong and not to be trusted. They just calculate it in a different way. When chosing a mortgage, most brokers would say that a daily interest calculation is probably best.

    regards
  • Thank you very much for kind help.
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