Hello,I have been loaned $60,000 to reduce my mortgage for a while,at reduced interest to my bank.Can anyone tell me how I work out compounded interest rates pls?
Also, if YOU had a large mortgage, & the offer of a loan of $60k for 12mths, what would you do with it? Put it into mortgage,or use it some other way?
Looking 4 good ideas.[biggrin]Is the mortgage for your home or an IP?
Cheers,
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
It’s actually for what ever I want.But must be avail to be paid back in full,with compounded interestThat’s why i need to know the formula 4 working out compounded interest.Why do u ask?
Misty how can the mortgage be whatever you want it to be. It is either a PPOR or an IP.
Simons questions is not a trick question.
If it was your PPOR you could merely place the funds in your offset account and that would reduce your interest burden.
If the loan is for 12 months why not take the principal balance and multiply by the annualised interest rate you are being charged. i.e $60,000 x 4% = $2400 to give you the simple interest calculation.
From what you say the loan is from a family member of friend so why complicate matters. Remember if you borrow $60,000 and have to pay interest anywhere near the rate you are being charged it hardly seems worth doing.
If you have to calculate in using a compunding effect then it is not difficult. Take the balance at the end of each month and apply the rate of interest to the revised balance figure. Repeat this for the 12 months and that will give you the comound interest. Remember not all months have 30 days.
If you usual financial calcuator it will give you the answer easily.
Cheers Richard
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http://www.yourstatefinance.comIP funding and US property finance
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Misty, they were asking about your mortgage,if it is for an IP or PPOR.
Here is a link to an online calc,or you could do it manually as detailed previously.
Tools
http://www.apimagazine.com.au/calculators/compound_interest.html
I think there is a template in newer versions of excel – called something “Loan Amortisation”
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
hi,thanks for links.As for whether it is for a PPOR or I.P.,that wasnt what I was asking! I was only asking how to calculate compounding interest! Also, “it’s hardly worth it” (if its similar interest to bank)- well,I know who I would rather get it…family,or the bank….hmmm…doesnt take Einstein to work that one out! SO YES! IT IS WORTH IT!
I think Simon’s question was legitimate.I think what he was getting at is that if it is for your ppor and you are getting the funds cheaper than what the bank can provide after allowing for redraw fees etc,then it may be worth doing.But if it is for an IP then you would need to look at how the ATO would view you redrawing the 60000 in 12 months time,and also I imagine you would need some pretty impressive documentary evidence to be able to claim the interest paid to your family.
Tools
There is every possibility that I may be wrong as I have not done any “real” maths for a long time. But I think the formula for compound interest is:
n
P(1 + r)Hard to write it on a post actually. I’ll try writing it out.
Get the rate and add 1. Put the entire amount to the power of n (which is the time unit). Multiply the whole amount with the principal.
So, on a 5% interest(p.a), 2yrs, 100,000. My calculations give me 110250. Make sure your interest rate is the same time unit as your “n”
Hope this helps and doesn’t confuse!
Munjy
Tools says it would be difficult to document that you had paid interest on your loan to a family member. If you are acting legitimately the relative who has lent you the money will show it as income in their Tax return- hey presto– There is your hard evidence that you have paid the Interest on your loan.
hi Misty1
buy a hp 10bII and it gives not only compound and Amortisation interest but hell of alot more that you will be able to use.
Including actual monthly interest rate.
I use it daily great calculator.here to help
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