Hi All,
Just received a statement of a loan of have for $168,000
Interest rate is 4.5%
Loan term 20 yearsAfter inputting this information into a online calculator says the following
Basic Repayment Calculator ResultsRepayments Interest paid
Monthly $1,062.85 $87,084.00
Weekly $245.06 $86,862.40
Fortnightly $490.24 $86,924.80
Half monthly paid fortnightly $531.12 $86,937.60However. I am paying weekly $265.00, which is much more than that described above. The only logic I can see here is that although I am paying my loan off weekly, they are just gathering this money until one month and then putting it onto the loan? So there, there is no benefit for me in doing?
Also.
On my statement seems to be out of whack. I have paid $6625 off the loan over 25 weeks, but my final sum is $165,583.68 meaning that I only paid $2417.00 of my loan. If the interest rate is so low, how on earth can I have paid more on interest than on my principle? The way it works is that the interest is put back on the loan after the period (in this case 25 weeks).
I wish to say something to them because at first glance this doesn’t make a lot of sense to me, but most probably wrong.
My understanding is we are paying interest and principle, but gee, not much by the look of it?Here are the sums.
Fee of $250
Initial capitalisation interest fee $343.96 (before the first payment was made)
Capitalisation of interest of $3753.7225 x $265 (6625)
+ $230 (extra payment) = $6855Any help would be much much appreciated thanks.
JoeSorry just another thing.
So this looks like for every $265.00 per week I pay, only $96.68 per week is literally taken off my principle amount?
Is that correct, that seems very unusual doesn’t it?
Hi Joe
Without seeing the loan statement i hate to say there are so many variables it is not true.
Does the lender charge interest daily and debit monthly, is there an offset account attached. Is it a 100% offset acccount and If so does the interest get offset daily or quarterly like some.
Does the offset account alter the interest component or merely adjust the principal balance.
The rate of interest at 4.5% i assume is a typing error or maybe it is a longer term fixed rate.
Does the lender allow for weekly repayments.
Sorry but the list goes on forever.
Easiest thing to do is give the lender a ring.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
Much appreciated reply.
There is no offset account first of all, I don’t have the ability.
Apparently the interest in charged daily and added monthly, but looking at the statement it shows the interested was added as a lump sum at the end of the six month period, so it looks great my loan was going down and then all of a sudden bam a lump sum interest amount of over $3000 as above, was added.
What other variables would you need, I really need to get this sorted BEFORE i go to see lender as they are pretty hard to deal with to say the least thats why i am posting here.
Also why do you think it is not 4,5% is there a calculation error? I am assured it is 4.5% and besides the monthly repayments are correct when I use an online calculator at 4.5%, over 20 years at loan amount of $168,000 but I still feel that you are right and something doesn’t add up here.
Thanks again.
Ok the variables are untold.
Which lender is with and is the loan variable?
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Ill inbox you richard.
Ta
Ok answered
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Does anyone know if these calculation seems correct?
I know there is someone smart enough to know how to do the maths, but it just aint me.
Joe sorry has nothing to do with the maths has to with the mortgage terms.
5 + 5 normally equals 10 but could be soomething else if + has an alternative meaning.
Without seeing behiind the scenes and understanding the letter of offer you will never now the answer.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
4.5% is quite low ..Is it a honeymoon loan? or a fixed loan? does it revert to a higher rate; if so these will have a bearing on the cal.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
the math looks right- and yes you are on a P and I loan- at the initial stage you will be paying a much higher interest VS principle “balance” ; the amount of interest you pay every week will change slightly, but overall “repayment” will not change,
who’s the lender? and is this a commercial type loan where the interest is capitalized?
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Michael, private family lender with private family terms and ways of calculating everything hence my answer.
2 + 2 doesnt always = 4.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Exactly as Michael states above.
Wow I didn’t realise that interest made such a high proportion of the initial period of the loan, outstanding.
I regret the future when i need to get a $450k loan on 7.5%, would you even be paying any principle on the first few years on a loan like that. Makes you think, its better off to save cash and buy a house outright… Although obviously house prices would be higher by that time, then again would it be as much increased as you pay in interest?
interesting.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
