Sorry if this is a painfully obvious question. but I have to ask it anyway. When you have an interest rate rise how do you recalculate your wrapee’s loan repayment so the loan will be paid out in the period set.
Thanks
Gavin
Gosh I don’t know ,how about…
Take away the amount he/she has already paid from your agreed value then plug in that number into your EXCEL spreadsheet,(with the new interest rate) that you had set up in the first place and away you go…See told you i didn’t know, just wanted to get more posts than you[grad]
Gavin
Depends on the termns of your installment contract.
If the interest rate shown on your contract is a variable rate one and the Special Conditions allow for increases then simply YES. Recalculate and advise the wrappee of the new repayment.
If it is a fixed rate then NO. Lets hope if you have offered this option then you have fixed your own rate of interest.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
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Gavin
I just look at the whole loan and calculate what the payment would have been from the start at the new interest rate. This is then the new payment.Keep smiling
Felicity
Felicity,
If I understand you correctly, my wrapee owed $32,000 at the start of her loan over 25yrs at a rate of 8.56% which worked out at $119.05 per fortnight. 1 yr on and she currently owes $30,786.36 and after the interest rise she is getting charged 9.07%. So you would work out the repayments on the loan of $32,000 at 9.07% over 25 yrs = $124.17 per fortnight.
Is this correct?Thanks Gavin
I would have thought you just base it on the balance owing x new rate x no. of years remaining. Is that not correct?
* Also – quick question — if you have fixed the rate for your wrappees (based on the fixed rate you can currently get, plus say 2%) are you then required to fix your rate too, or can you leave yours variable?
Thanks
Lozza [biggrin]
Gavin, I’m happy to answer your question verbally.
If you need a thorough answer call my mobile and I’ll call you back.Cheers,
Rich
0414 395 672.Modo Project Builders | Modo Project Builders Pty Ltd
http://www.modobuilders.com.au/
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I do the calculation on the original loan amount not the amount owing also. Thats how the bank does mine to them so thats how I do it for my wrap clients.
Dave
Yes, Gavin, that’s how it works. It’s a heck of a lot simpler than trying to calculate exactly how much time remaining etc.
Keep smiling
FelicityThank you everybody for your help.
Regards,
Gavin
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