Understanding Nationwide Mortgage Calculations

nnxen

Hi all,
I've been comparing mortgages with Nationwide recently and I can't quite figure out how they're arriving at their figures. The cumulative interest (calculated daily) over the deal term doesn't seem to tally up with what I calculate, and I noticed that the "cost of deal" doesn't seem to make much sense either.
Tackling the latter first since it's a more obvious problem, if I look at a 2 year deal with no product fees, their figure for total repayable over 2 years seems to always be around 3% higher than 24x the monthly repayments. Where is this additional coming from? I can't find any information on it

For example; (unfortunately as a newbie, I can't post direct links)
On the nationwide "Product Rates" page (tools.mortgages.nationwide.co.uk/product-rates)
- Set the 2 year fixed rate deal to "No product fee", expand "Show full details". We can see that the figure for "Total payable - This is the total of your monthly payments and any fees paid. - Over initial 2 year deal" is not equal to 24x the monthly repayments.

nnxen

Edit - where I wrote "Cost of deal", that should be "total payable (over 2 year deal)"

Rachelredwood16

Hello, also a newbie here! 

I believe it's because although it's a fixed rate, you get the rate for slightly longer? I've noticed if I look at the date in which the fix rate ends it shows September time, not July for 2 or 5 years. So if you multiply the monthly cost by how many months it would equate to and not 24 does it match up? 

jrawle

I can't reproduce no. 2. The total payable is exactly 24x the monthly payment when I try it. Do you have the example numbers you put in?

As for issue no. 1, it's quite tricky to calculate the cumulative interest and there are various ways that rounding of time periods, etc. may be different. Presumably it's the same ballpark?

nnxen

jrawle said:

I can't reproduce no. 2. The total payable is exactly 24x the monthly payment when I try it. Do you have the example numbers you put in?

As for issue no. 1, it's quite tricky to calculate the cumulative interest and there are various ways that rounding of time periods, etc. may be different. Presumably it's the same ballpark?

Hmm, that's odd.

Starting at tools.mortgages.nationwide.co.uk/product-rates

Do you have a Nationwide mortgage? Yes

I want to: Move home

Price of property: £460,000

Deposit amount: £160,000

Length of mortgage: 30 years

Set "2 year fixed rate" deal to "No product fee"

"Monthly payment" is £1,362.25

Click "Show full details"

"Total payable" "Over initial 2 year deal" shows £33,618.55

However, 24 * £1,362.25 = £32,694

My cumulative interest calculation is coming out under the reported value ("cost of deal") by about 4%.

jrawle

The difference appears to be that you say you want to move home. If you select that you want to switch mortgage deal, the total payable is exactly 24 times the monthly payment. This suggests they are adding an additional cost that is incurred when moving, although I don't know what that would be given that it says it includes free standard valuation. I think you'll have to ask Nationwide.

kingstreet

Nationwide illustrations automatically use an assumed commencement date of 1st of the month, causing a full month's accrued interest. Calculate 30 days interest (only) and add it to your total and see if that matches.

nnxen

Thank you - that seems to be it! Not a perfect match but very close.