Exact Mortgage Repayment/Interest Calculations

Simian!

I've never been able to replicate the exact Bank of Ireland figures on my mortgage statements. I'm hoping you can clarify for my own records/sanity.

I have a mortgage for €260,000. It started out as a 4 year fixed rate @ 4.59%. Term is 35 years. I pay monthly. I think when we started out we postponed the payment for 1 month so the actual opening balance was €260,228.87, in August 2006. When I attempt to calculate the repayments and interest I can only get within +€27.71 of the first quarterly balance. This is the first quarterly statement from BOI. Can you tell me exactly how the €2,999.58 figure is arrived at?

Balance|Interest|New Balance w/ Quarterly Interest
€260,228.87|€228.87|
€258,986.71||
€257,744.55|€2,999.58|€260,744.13

Bank of Ireland: Laura

Hi Simian!


Thanks for your query.


With a Bank of Ireland mortgage, the interest is calculated daily and applied to the account quarterly. As your account was opened in August, the first interest posting would have been in September, only consisting of a few weeks. The interest that was applied to your account in December would have been for October, November and December, therefore would have been considerably higher than the amount charged in September.


Without having the exact account details, it would be hard for us to give you a more detailed breakdown of the €2,999.58 interest charge here. Please contact our Customer Relationship Unit on 01 6113333 and a representative will be happy to go through the statement in detail with you.


Hope this helps.

Laura

srsly78

Only the person that wrote the code on their computers could tell you exactly. There are loads of tiny little details that make it quite complex. Consider the fact that not all quarters of the year contain the same amount of days for starters.

Simian!

Hi Laura,

Thanks for the reply. I'll call that number and see if someone can clarify. 

I'm sure the person who wrote the code simply used equations that are standard across many mortgages.

srsly78

There are lots of different standards applied, it's a complex area that I have had the misfortune of working in. A lot of the standards are detailed here: http://en.wikipedia.org/wiki/Day_count_convention

But yes, many people seem to think it's a simple calculation.

Tow

srsly78 wrote: »

Only the person that wrote the code on their computers could tell you exactly. There are loads of tiny little details that make it quite complex. Consider the fact that not all quarters of the year contain the same amount of days for starters.

Exactly. A good few years ago a BOI manager wanted a small program tocalculate how much new customer's mortgage repayments would be.  He supplied us with all the formula anddocumentation he could lay his hands. We went through the formulas, he went through formulas, he phoned people across the bank and asked, but try as we might we could not get an exact match to what the mainframes calculated.