mads
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| posted on 19/9/10 at 01:12 PM |
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how do they work out your mortgage payment?
I'm trying to determine how much difference overpayments on my mortgage would make but I cant find a calculator online. So I figure I'd
create a spreadsheet to work it out for myself and can then also add in changes in interest rates on it.
Can someone tell me how they work out your mortgage payment? i.e. is it capital divided by term of years divided by 12?
The above seems to make sense but then what I cant figure out is what amount do they charge the interest on? if adding to the total capital
outstanding it seems to give a VERY large interest amount which doesnt make sense.
Can anyone explain this to me? 
We gain knowledge faster than we do wisdom!
Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in
sideways, thoroughly used, totally worn out and loudly proclaiming... "f*ck, what a trip!"
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McLannahan
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| posted on 19/9/10 at 01:14 PM |
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HSBC one is nice and simple.
https://mortgages.hsbc.co.uk/mortgage-calculators/Mortgage-Overpayments-Calculator
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pdm
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| posted on 19/9/10 at 01:16 PM |
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Depends on whether interest is added annually or monthly.
If its monthly, then the they do it like this:
capital x days in month x int rate / 365
eg 50000 outstanding in August is:
31 * 50000 = 1550000
Times that by interest rate say 5%
1550000 * 5% = 77500
divided by 365
77500 / 365 = £212.33 in interest
So if in your spreadsheet you start with balance and then put in that formula for interest and then take off a payment and do that over 12 months it
shows you what happens with payment.
I have one I did, bit rough and ready but it'll give an idea if you want a copy PM me and I'll email it.
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mads
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| posted on 19/9/10 at 01:19 PM |
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quote:
Originally posted by McLannahan
HSBC one is nice and simple.
https://mortgages.hsbc.co.uk/mortgage-calculators/Mortgage-Overpayments-Calculator
Thanks McLannahan. Thats useful but as interest rates have been changing and thus my overpayments have I need one i can adjust on a monthly basis.
We gain knowledge faster than we do wisdom!
Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in
sideways, thoroughly used, totally worn out and loudly proclaiming... "f*ck, what a trip!"
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mads
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| posted on 19/9/10 at 01:30 PM |
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PDM - thanks for that. So if it is a repayment mortgage then the repayment of the capital is the same each month for the length of the mortgage?
i.e. capital/number of years/12 ?
We gain knowledge faster than we do wisdom!
Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in
sideways, thoroughly used, totally worn out and loudly proclaiming... "f*ck, what a trip!"
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pdm
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| posted on 19/9/10 at 01:34 PM |
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hi
yes i suppose it would be.
if you divide capital by term then 12, you then would have to add on that months interest.
the way i did it was do 12 cells for the year
in A1 put you capital
in A2 put "=((((A1*31)*5)/100)/365)"
in a3 put your payment
in a4 put "=a1+a2-a3"
then in b1 out "=a4"
b2 is "=((((b1*31)*5)/100)/365)"
b3 is payment
b4 is "b1+b2-b3"
etc etc etc
HTH that helps
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nitram38
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| posted on 19/9/10 at 01:41 PM |
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Check your small print!
Lots of Mortgages make a charge for paying it off early.
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mads
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| posted on 19/9/10 at 01:49 PM |
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quote:
Originally posted by nitram38
Check your small print!
Lots of Mortgages make a charge for paying it off early.
only if you reduce the term of the mortgage as far as i am aware. and some allow you to make overpayments up to a certain percentage of the capital.
this i would think then has an impact on your repayment amount rather than the term of length.
We gain knowledge faster than we do wisdom!
Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in
sideways, thoroughly used, totally worn out and loudly proclaiming... "f*ck, what a trip!"
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Stott
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| posted on 19/9/10 at 02:00 PM |
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Calculator with adjustable interest, amount and term:
LINK
[Edited on 19/9/10 by Stott]
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pdm
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| posted on 19/9/10 at 02:02 PM |
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not that i am any expert but we did a similar thing.
from I gather if you are on a discount, you cant normally repay it before discount ends without a penalty but you may be ok after that.
if you overpay for a bit (as opposed until its repaid), they tend to reduce your repayments so that you end up still paying it over original term
most you can repay up to 10% a year over.
Hmm - this is starting to sound like financial advice for which I am most definitely NOT qualified.
mads - the above is just from my experience please please make sure you read up your small print etc as nitram38 says
I'm ducking out now before I bankrupt anyone but if you do want a copy of spreadsheet I can send it....
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mads
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| posted on 19/9/10 at 02:13 PM |
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thanks pdm
dont worry i wont be suing you for misinformation and i have read the small print. what you have said is correct re: reducing the payments so length
of term is still the same but smaller payments. also, i am allowed to pay 10% over without any penalties.
i have sent a u2u for your calculator but yes please, i would like to see what you've done.
We gain knowledge faster than we do wisdom!
Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in
sideways, thoroughly used, totally worn out and loudly proclaiming... "f*ck, what a trip!"
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StevieB
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| posted on 19/9/10 at 06:38 PM |
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IIRC you have to have the ability to repay an amount of capital by law - hence most allow up to 10% of the remaining equity to be over-paid every
year.
As far as the amount of interest goes, most mortgages are geared so that in the first year you pay 95% interest and 5% capital, and by the end it
moves to 95% capital and 5% interest.
That's why when you get your first fw mortgage statements it looks like you;ve paid off about 30p of the capital for the £12k paid in over the
last year (not that I received my statement recently...)
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sonic
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| posted on 19/9/10 at 06:39 PM |
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Its not until you go to the building society to payoff your morgage and they get all the paper work out in front of you that you realise how much you
have payed for your house! and it is about 3 times what you payed for it!.
If you can pay it off early do so and then try and bank what you were paying monthly into your savings.
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bmseven
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| posted on 19/9/10 at 07:59 PM |
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http://www.mortgagesexposed.com/
http://www.guardian.co.uk/money/mortgage-calculator
BMW 7 Resource
Bures Pit anyone?
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Paul TigerB6
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| posted on 19/9/10 at 08:10 PM |
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Overpayments are always a good idea if you can afford them. They are directly off the capital and depending on how the mortgage company calculates
interest, should mean as you are reducing the capital owed, more of your standard monthly payments goes towards clearing the capital element.
As said though - read the small print or check with your mortgage provider as each may do it slightly differently.
Its been a while since i've done any mortgages but many recalculate overpayments annually and some monthly to produce your new monthly payments.
Obviously when you look to remortgage to get a new deal then you should owe less so meaning a lower repayment then the last time and so allowing you
to make larger overpayments. In the later years, you may want to specify a mortgage allowing overpayments above the standard 10% off the outstanding
balance annually if you can afford it.
This should help with a guide at least
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mads
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| posted on 19/9/10 at 09:37 PM |
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cheers for all the info folks. BMSeven - the first link is certainly an interesting read. going to have to spend some time reading it mind.
I've just gone through my previous two years statements and it looks like they have been taking my overpayments off the remaining capital each
month which is good. I've been very fortunate in that I have benefited from the low interest rates and in fact for all of last year was only
paying about 5% of my mortgage payment as interest! 
We gain knowledge faster than we do wisdom!
Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid in
sideways, thoroughly used, totally worn out and loudly proclaiming... "f*ck, what a trip!"
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TimEllershaw
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| posted on 20/9/10 at 12:52 PM |
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If you are using MS-Excel have a look at the PMT function. Calculates the payment for a given balance and interest rate. I guess that or something
similar in that section should do what you want.
Tim.
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