Mortgage calculation question

MehulLakhani

MehulLakhani

MehulLakhani

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Joined
12 Jan 2003
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1,228
Location
Watford
Hi All

Struggling to calculate this out for a friend - we have used various on-line calculators, but the answers are coming out odd.

Friend had mortgage that started at approx 500k , 3 years ago- 27 years now left, rate 2.49, currently paying 1900 a month.

He currently has only £180k left on it - lucky bugger, has been overpaying a lot recently.

He has £50k from parents that he would like to use to overpay, and get down to £130k region.

How much in interest would he save ?

R

Mehul
 
Well with rates likely to rise over the next few years it would probably make sense to pay off as much as possible as soon as possible. Especially as it's unlikely that that 50k is going to make more than 2.49% anywhere.

Exact figures it's impossible to say, but you could do an educated guess based on todays figures.
 
Why does he care, it'll be paid of in a few years at that rate meaning any interest calculation is pointless.

Show off thread by any chance.
 
MehulLakhani said:
Hi All

Struggling to calculate this out for a friend - we have used various on-line calculators, but the answers are coming out odd.

Friend had mortgage that started at approx 500k , 3 years ago- 27 years now left, rate 2.49, currently paying 1900 a month.

He currently has only £180k left on it - lucky bugger, has been overpaying a lot recently.

He has £50k from parents that he would like to use to overpay, and get down to £130k region.

How much in interest would he save ?

R

Mehul
Click to expand...

After 3 years he went from 500k down to 180k? He must have been paying in excess of 6 grand a month to get down to that level...

Your friend is not Spie is he?
 
One could write an algorithm to calculate this but it would require maths but programmers don't know maths so that wouldn't work.
 
Jono8 said:
Nearly £9k a month just on mortgage repayments. What does your friend do for a living!
Click to expand...

FPf2dMSl.jpg
 
Jono8 said:
Nearly £9k a month just on mortgage repayments. What does your friend do for a living!
Click to expand...

He spends his time giving his mates personal financial information in detail and asks them to post on a computer forum for advice.

That's the path to such financial success.
 
D.P. said:
One could write an algorithm to calculate this but it would require maths but programmers don't know maths so that wouldn't work.
Click to expand...

Well, as it happens I have actually written a program that calculates things like this!

From that he would have needed to be paying over £9.5K a month to reduce the balance from £500K to £180K in 3 years (assuming a 25 year mortgage)

Assuming he keeps on overpaying at the same rate and adds the extra £50K overpayment at the start of the 3rd year then he'll have paid it off after another year, having paid around £1,950 interest in that time.

With no £50K overpayment it would take an extra 8 months to pay off the mortgage and he'll have paid around an extra £1,800 in interest.

That's what I get anyway, could be completely wrong :p
Either way if the figures are genuine it's probably not worth worrying about too much!
 
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