OT - mortgage daily interest rates? - help!
mcerd1 - 5/2/13 at 03:07 PM
ok way off topic, but I've been looking at this for hours now and my head hurts 
trying to work out the best time to pay off a mortgage (within the next 6 months or so) and what the total cost will be to the nearest few £ (there
are early repayment fees and other costs involved)
trouble is its calculated using a daily interest rate - which they don't tell you anywhere as far as I know 
all I know is that its a Halifax mortgage with fixed rate of 2.94% APR
I assume its compunding daily but they don't tell you
(its like pulling teeth tring to get good info....)
i found a few rate converters online (mostly american) but then i found out that american APR is different from ours
can someone please tell me how to get an accurate daily rate for my calcs
cheers
-Robert
Slimy38 - 5/2/13 at 03:15 PM
Mine is on my annual statement if I remember rightly? It's a tiny number, something like 0.004 %.
mcerd1 - 5/2/13 at 03:18 PM
its not on the statment that we've got
roadrunner - 5/2/13 at 03:19 PM
If your trying to save money. Pay your mortgage off as soon as you can.
Less interest is payed that way.
blakep82 - 5/2/13 at 03:29 PM
Its basically (but not entirely accurately) your monthly interest divided by the number of days in the month. If I remember right from my 4 year
sentence at rbs, interest is calculated on a daily basis by computers, added monthly, so if you say £200 of interest was added last month, then its
safe to assume the daily rate is 200/30
So about 6.66 a day. Youre only going to be pennies out
Best time to pay it off is as soon as you can. After that youll only be paying more interest, unless theres something in your question im really not
getting?
2.94%/365 days is 0.008, but remember the balance on the account is constantly changing too
Barkalarr - 5/2/13 at 03:43 PM
Sent u2u
Slimy38 - 5/2/13 at 03:46 PM
The other option is what my friend is doing. He has tried to pay his mortgage off early, but he has an early redemption penalty of a couple of k.
He's basically frozen his mortgage at something like £50 outstanding, so he's paying a few pennies a year interest but he's avoiding
the early penalty fee. Seems absolute nonsense, but five years of pennies against thousands is definitely worth it.
mcerd1 - 5/2/13 at 04:25 PM
quote:
Originally posted by Slimy38He's basically frozen his mortgage at something like £50 outstanding,
we can't go down that route - the flat will be getting sold off (and no new mortgage required)
the eary repayment fee is quite alot, so we are trying to figure out if there is any saving in waiting (I doubt there is) - and if not what the total
cost will be (inc interest) for any given day - that way we can work out the min sale price we need - we could be cutting it quite fine so I'd
like it as accurate as possible
I've used the APR/365 method at the moment,and I know thats just a little higher than the real interest but its anyoing me that I can't get
it right (its so simple to calculate the other way round...)
[Edited on 5/2/2013 by mcerd1]
mds167 - 5/2/13 at 05:59 PM
Why not request a variety of redemption quotes with different end dates from the lender?
Let them do the hard work.
They shouldn't charge for them.
matt_gsxr - 5/2/13 at 06:06 PM
Halifax (and probably the others) are a bit cheeky on their rates.
They calculate compound interest daily (fair enough) but that The rate per day = your annual rate / 365
(not sure about leap years but lets not worry here)
As you will quickly notice the amount you pay over a year is higher than the annual rate (owing to the compounding effect), it does appear to be
legal, although it does strike me as corrupt. It adds up to about £50 a year per £100k on your rate, which isn't much but is still theft.
A couple of ways of calculating the compound interest but the easiest is probably with Excel and do it for everyday. That should be good to the
nearest penny. If you only need to be good to the nearest pound then you can reduce the frequency of the calculations (perhaps to your payment
dates).
Regarding paying off the mortgage, you might consider leaving it owing them £200 or so, that way you might avoid an early redemption payment. Nothing
like a £3.47 mortgage payment. If you pay off the mortgage completely with more than 10years to run then they may charge you something.
Matt
mads - 5/2/13 at 06:11 PM
quote:
Originally posted by blakep82
Its basically (but not entirely accurately) your monthly interest divided by the number of days in the month. If I remember right from my 4 year
sentence at rbs, interest is calculated on a daily basis by computers, added monthly, so if you say £200 of interest was added last month, then its
safe to assume the daily rate is 200/30
So about 6.66 a day. Youre only going to be pennies out
exactly right. I created a mortgage calculator in excel to look at how much my mortgage would come down with overpayments and this is how I worked out
what my interest repayments would be each month. With the calculator I found I am out by less than 5p each month compared to the annual statement I
get from my bank.
If you want a copy of the calculator, drop me a U2U with your email address.
[Edited on 6/2/13 by mads]
nick205 - 5/2/13 at 09:17 PM
I built an Excel file to work this out to the day for the purposes of calculating over payment gains.
You enter the outstanding balance / date / APR and then add in your monthly payments and any over payments.
Checked against the banks calculations it's within £1 by the end of the term (10 yrs).
U2U me your email address and I'll happily send it over to you.