Key Post A guide to mortgage repayment calculations

[twofor1]

So My query really only further confuses the issue- If you have missed 10 payments of €1500 (monthly repayment) - say €100,000 MortgageLoan- of which 1000 is capital and 500 is interest- thereby creating an arrears balance of €15000 . Loan outstanding at start of year was €100,000-
is the total debt now €115000 or €105,000?

My understanding is;

If you owed €100K on 01st January and you missed 10 repayments of €1,500, then on the 31st October you would be in arrears of a bit more than €15K, as the outstanding balance is slightly higher each day, there would be slightly more interest applied each day.

Your total debt would be roughly €104,245. (Assuming an interest rate of 5%) as Interest is calculated on the outstanding balance on a daily basis.

 

[Brendan Burgess]

I seem to recall arrears being capitalised onto the mortgage, this had the effect of increasing the Capital Balance by the amount of the Arrears !! ...

I would currently argue that the portion of Arrears that affects the repayment term or amount should only be the interest portion- indeed the interest portion of the missed payment.

An example for one month where the interest rate is 12% per annum is probably the easiest way to explain.

For simplicity, let's say that the repayment due is €3,000 per month

|Total balance|scheduled balance | arrears balance
1 January| €100,000|€100,000
Interest charge|€1,000
31 January| €101,000|€98,000|€3,000

If you had paid your repayment on schedule,the total balance at 31 January would be €98,000

As you did not pay it, you owe €101,000

If they capitalise the arrears (capital and interest), the total balance remains the same, and the scheduled balance rises to €101,000.

 

[Belcamp70]

Really informative thread.

I took out a mortgage last year and when reviewing my end of year statement and comparing it with the amortization tools mentioned above, it looks like I was over charged in the amount of interest paid (by over a grand).

My question is, what my best approach to getting this resolved?



The above was posted on your site a long time ago and no one answered


My question is there a company who will examine mortgage account and tell us if overpayed or not.

 

[Brendan Burgess]

comparing it with the amortization tools mentioned above, it looks like I was over charged in the amount of interest paid (by over a grand).

I don't see how you can lead to that conclusion from looking at amortization tools.

Just calculate the interest each month and forget about amortisation.

You do not need to pay someone to do that. It would cost far more than €1,000 for someone competent to do it.

Brendan