Mortgage free in Forever Home :-)

redofromstart

That sounds like one of those horrible maths exam questions they used to boil my brain with at school. I suspect that someone more mathematically minded will get it but my stab in the dark would be something to do with compounding the interest.

KajiKita

redofromstart said:

That sounds like one of those horrible maths exam questions they used to boil my brain with at school. I suspect that someone more mathematically minded will get it but my stab in the dark would be something to do with compounding the interest.

Thanks for the relating…. Boiling my brain pretty much sums up where I’m at with it …

KK

beanielou

Way beyond me, sorry.

savingholmes

I think the answer is £65 interest - I've just put it into a compound interest site. I think the 365 day thing was a red herring - as Sandy had said she was saving 5p a day in interest - but you didn't start with how much interest per day you were saving. It will in practice be more that you save as you are unlikely to ever get a rate as good as 1.27% again - assuming I understood your starting interest rate correctly.

KajiKita

Thanks @savingholmes. It’s actually 2.17% interest rate. 

I will have a look at that site (tomorrow, way too late now) 😊

KK 

savingholmes

Then it's even better return about 38% - however you could earn more in interest in an isa which would be better long term. If you got say 5% for 5 years you'd keep as much as you paid in interest. I play on the site below sometimes to work out different scenarios - particularly for my AVCs

South_coast

KajiKita said:

So that suggests that my method should NOT be:
- Take OP value £320 x 0.0127 x 365 (for interest in a year)
- Multiply by the number of years remaining I.e. 15

2.17% is the annual interest rate. You're getting the annual saving, then multiplying it by 365 years, then multiplying it again by 15. 

£320 x 0.0217 = £6.94 saving per year
x 15 years = £104.16, which is still not quite the figure the mortgage calculator is coming up with (I suspect their maths is more sophisticated than mine), but closer than your first attempt

KajiKita

South_coast said:

KajiKita said:

So that suggests that my method should NOT be:
- Take OP value £320 x 0.0127 x 365 (for interest in a year)
- Multiply by the number of years remaining I.e. 15

2.17% is the annual interest rate. You're getting the annual saving, then multiplying it by 365 years, then multiplying it again by 15. 

£320 x 0.0217 = £6.94 saving per year
x 15 years = £104.16, which is still not quite the figure the mortgage calculator is coming up with (I suspect their maths is more sophisticated than mine), but closer than your first attempt

Thanks SouthCoast - I suspect that is as close as I can get 😊

KK

Rach273

It will be more because of the compound effect, so for the first year the interest saving would be £6.94, but for year 2 it would be (£320 + £6.94) x 0.0217 = £7.09, year 3 would be (£320 + £6.94 + £7.09) * 0.0217 = £7.25 etc. because you would be being charged interest on the interest incurred had you not made that capital overpayment.

This is where I find Excel really useful!

Watty1

Totally befuddled and slips quietly out