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What is the difference between these two mortage calculators?
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Hus_87
Posts: 3 Newbie
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,
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,
0
Comments
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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:0 -
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?0
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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.
regards0 -
Thank you very much for kind help.0
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