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mortgage interest
Hi, What is the correct excel formula to calculate the monthly interest on
an interest only mortgage of £100,000 at a rate of 3.75% per year where the interest is calculated daily? At present I use =((C22*C19)/12) where C22 is £100,000 and C19 is 3.75% but the result is not the same as what I am being charged each month. Thanks, Tracy |
#2
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mortgage interest
Hi Tracy,
In part, the answer depends on how fequently interest is charged. Although it might be calculated daily, it might only be charged monthly. Plus, some financial institutions calculate the daily & monthly interest on the basis of a year having 12 30-day months, so interest for a 365 or 366 day year is calculated as if there were only 360 days (30 per month, even for February). -- Cheers macropod [MVP - Microsoft Word] "Tracy" wrote in message ... Hi, What is the correct excel formula to calculate the monthly interest on an interest only mortgage of £100,000 at a rate of 3.75% per year where the interest is calculated daily? At present I use =((C22*C19)/12) where C22 is £100,000 and C19 is 3.75% but the result is not the same as what I am being charged each month. Thanks, Tracy |
#3
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mortgage interest
Hi,
=C22*((1+C19/366)^30)-C22 (for a 30-day month in 2008, a leap year) (for a 31-day month, change the "30" to 31. For a non-leap year, change the "366" to 365) Regards, Ramachandran "Tracy" wrote: Hi, What is the correct excel formula to calculate the monthly interest on an interest only mortgage of £100,000 at a rate of 3.75% per year where the interest is calculated daily? At present I use =((C22*C19)/12) where C22 is £100,000 and C19 is 3.75% but the result is not the same as what I am being charged each month. Thanks, Tracy |
#4
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mortgage interest
On Nov 26, 2:20*pm, "Tracy" wrote:
What is the correct excel formula to calculate the monthly interest on an interest only mortgage of £100,000 at a rate of 3.75% per year where the interest is calculated daily? At present I use =((C22*C19)/12) where C22 is £100,000 and C19 is 3.75% but the result is not the same as what I am being charged each month. The answer might depend on the terms of your loan and the customs of your jurisdiction (UK?). You have the correct formula for the "typical" interest-only loan. It would help us help you if you provided the amount you are actually being charged. Otherwise we are just making wild-ass guesses about the terms of the loan. Some other questions to answer: 1. Is this a fixed-rate or variable-rate loan (specify which)? 2. Is the amount "charged each month" constant or variable (specify which)? 3. Did the lender specify another rate -- usually called the effective rate or APR -- which is based solely on the terms of the amortized loan (i.e. principal, interest rate, loan term, calculation frequency) excluding any up-front fees and payments? 4. Does your loan contract explain how the monthly payment is calculated? |
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