All Topics / Help Needed! / Urgent! Are the bank charging us more?

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  • Profile photo of mddedfmddedf
    Participant
    @mddedf
    Join Date: 2015
    Post Count: 43
    September 8, 2015 - 9:17 pm

    I just did an online calculation, it surprised me, but I may be wrong.

    we have a loan of $290,000 with $150,000 offset, the interest rate is 4.75%, the online calculator says the fortnight payment should be around $350, but we paid $750, I know the online calculator is not very accurate, but the difference is too much. Can anyone explain to me?

    Thanks very much in advance!

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    September 8, 2015 - 9:27 pm

    Md you don’t mention whether the loan is interest only or principal & interest.

    As I am sitting at an airport in Oslo, Norway I don’t have my online calculator but in essence.

    1) work out the repayment on the gross loan at the applicable interest rate and term.

    2) Then work out the interest component separately.

    Calculate the credited interest due to the offset benefit and add in the principal reduction.

    Divide by 2 and that will give you an approx fortnightly repayment but remember it will change each month depending on 101 factors.

    Cheers

    Yours in Finance
    0-40 properties in a decade

    Richard Taylor | Australia's leading private lender

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010
    September 8, 2015 - 9:39 pm

    The loan is most likely principle and interest (especially as you have said its a fortnightly repayment, interest only is generally monthly ONLY), so even though you are being charged less interest, the minimum repayment figure is still being debited. This just results in the principle decreasing at an accelerated rate as there is a lower than expected interest charge.

    • This reply was modified 9 years, 2 months ago by Profile photo of Corey Batt Corey Batt.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of mddedfmddedf
    Participant
    @mddedf
    Join Date: 2015
    Post Count: 43
    September 8, 2015 - 9:41 pm

    Thanks for your reply in the busy time, Richard.

    It is principle and interest loan.

    So should I divide $750 by 2 that is the repayment?

    Profile photo of mddedfmddedf
    Participant
    @mddedf
    Join Date: 2015
    Post Count: 43
    September 8, 2015 - 9:42 pm

    May I ask when people mention repayment, does that mean the repayment of the principle?

    Profile photo of mddedfmddedf
    Participant
    @mddedf
    Join Date: 2015
    Post Count: 43
    September 8, 2015 - 9:46 pm

    But even when I choose repayment type is P&I, the calculator still shows $336 per fortnight?

    I am so confused

    Profile photo of mddedfmddedf
    Participant
    @mddedf
    Join Date: 2015
    Post Count: 43
    September 8, 2015 - 9:51 pm

    Thanks for your explanation, Corey.

    So do you think which figure is the right one according to my loan situation.

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