FINANCIAL BODS! How do you calculate the overall cost of a mortgage?

Question

All I can find on the net is monthly repayment calculators. If a mortgage lender calculates it's interest on a daily basis how do I calculate what the total amount would be to pay back?

Cheers :)

Answer 1

You will have been given an 'illustration' (estimate) when you took out the Mortgage.

Some 'offset mortgage' (eg. Virgin One Account) have web site calculators than can give you an estimate based on today's Interest rates.

Why it is IMPOSSIBLE to calculate the total repayments on a typical 25 year Mortgage ..

1) Interest rates WILL change over the next 25 years - this makes a massive difference to your repayments (unless you are on a 25 year fixed rate :-) ) .. in fact many people have 2 or 3 or 5 year 'fixed rate deals' follwed by X years at 'standard rate' (assuming you don't remortage when the special rate ends)

2) You WILL move house (most likely more than once) during the next 25 years.

3) You WILL remortgage during the next 25 years - either to get another 'special rate deal' and/or to borrow more money (as your house increases in value).

4) You MIGHT decide to 'overpay' (or opt for an 'offset' Mortgage) = both can have a drastic effect on the total repaid

Having said all that, all you need to do is create a 300 row (25 years x 12 months) spreadsheet and enter number of days per month x interest rate each day minus ammount repaid that month to calculate amount outstanding for the next month (whilst ensuring ammount outstanding, in row 301 = £0) ... and then sum the repayments column.