How to calculate stuff

Viewing 12 posts - 1 through 12 (of 12 total)

Charlie_B
Participant
@charlie_b
Join Date: 2011
Post Count: 12
June 2, 2011 - 5:55 am
Hi everyone,
My sister and I have come to an arrangement whereby I will deposit $45000 into her mortgage (PPOR) for the short to medium term. She is going to pay me interest above what I'm currently getting in my high interest savings account, but at a rate less than what her mortgage is. It's easy for me to calculate the interest I will receive and the added tax benefit, but how do I go about calculating the benefit to my sister?
As I will ultimately end up withdrawing my money again along with the agreed interest, I'm struggling to find an online calculator that will accommodate this type of scenario and show the various outcomes.
Can anyone point me in the right direction?
Thanks peeps,
Charlie
Mayuran
Member
@mayuran
Join Date: 2010
Post Count: 20
June 2, 2011 - 6:33 am
(Sisters Morgage rate – The rate she is paying) x 45000x (no of days in her AC/365)
cheers
Mayuran
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
June 2, 2011 - 10:24 am
Hi Charlie
Why complicate life why not place the funds into her offset account and then come to an agreement each month what she pays you. That way when you need the funds back she can transfer them to you without the need for a redraw application etc.
Mayuran has outlined the calculation however you may wish to substitute "Sisters mortgage rate" with "Agreed interest rate".
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Mayuran
Member
@mayuran
Join Date: 2010
Post Count: 20
June 2, 2011 - 12:05 pm
Yes what i meant by ‘`The rate she is paying’ – is the rate she agreed to pay you..
Mayuran
Charlie_B
Participant
@charlie_b
Join Date: 2011
Post Count: 12
June 5, 2011 - 10:45 am
Hmmmm….unless I'm missing something (and I've been known for my lack of mathematical prowess in the past), this calculation doesn't make sense to me.
(7.17%-6%)x45000x365 = 192 172.5
This is clearly not the benefit (saving) she would be making on having $45000 sitting against her mortgage for 1 year.
Call me a dufus if you wish……
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
June 5, 2011 - 11:08 pm
Charlie you are getting confused
Try $45,000 x 7.1% = $3195 / 365 x 182.5 = $1597.50
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Mayuran
Member
@mayuran
Join Date: 2010
Post Count: 20
June 5, 2011 - 11:42 pm
One year savings should be calculated as follows…
Sisters mor = 7.17%
Agreed rate sister paying you: 6%
no of days in her account : 365 days
Amount : 45000
As per my formula above (7.17&-6%) x45000 x(365/365)= 426.50
Hi Richard : what is the 182.5? and why are you taking 7.1% istead of (7.17-6)- 1.17%?
thanks
Mayuran
Mayuran
Member
@mayuran
Join Date: 2010
Post Count: 20
June 5, 2011 - 11:45 pm
there is a typo in my previous posting : saving to your sisted is 526.50 not 426.50 – cheers
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
June 6, 2011 - 4:26 am
Apologies i was reading 2 posts at the same time and thought Charlie was asking for the savings over a 6 month period not 1 year.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Charlie_B
Participant
@charlie_b
Join Date: 2011
Post Count: 12
June 7, 2011 - 1:21 am
Mayuran and Qlds007…..thanks for your help. The figure of $526.50 for a period of 1 year is also what I had worked out before I put up my original post.
What I was hoping to be able to work out was how much time might be saved on my sister's mortgage by having my money sitting there and then what the implications for her are when I withdraw my money one day. I've only found one calculator belonging to AMP which will work out what the savings are on a mortgage when there's money sitting in an offset account, but it doesn't have the flexibility to put in the variables that fit our situation. I thought it would be near impossible to find an online calculator which will help us see the difference between taking up the arrangement we've come to, and keeping the status quo on her loan. I was hoping someone on this forum might've known where I could find a tool like that.
Thanks again for your responses. <br /:)” title=”>:)” class=”bbcode_smiley” /> Charlie
Mayuran
Member
@mayuran
Join Date: 2010
Post Count: 20
June 7, 2011 - 4:29 am
Hi Charlie
you can use the excel loan amortization template to work this out.
To get this template , open excel , File >new> under the templates select '' loan amortization' template . this template can be used to check various senarios.
in your case , you would add 45k under extra payments in month 1 and deduct 45k & agreed interest in month 12. and the ' time saving' would be the difference between ( scheduled # of payments and actual number of payments )…
hope this helps ..
Charlie_B
Participant
@charlie_b
Join Date: 2011
Post Count: 12
June 7, 2011 - 6:54 am
Hi Mayuran,
Thanks for that info. I have a Mac with 2007 version of Excel for Mac. It doesn't seem to have that template
Not to worry, I'll figure something out. Thanks for your help
Charlie