Software / calculation to check mortgage interest is correct.

No on 18/07/2014 - 14:30

Hi,

I want to double check the figures on my ubank home loan. I have no reason to suspect its wrong but since my mortgage is my biggest financial burden I think its worth a check.

I am useless at Maths so I googled for software but there seems to be one company who is spamming all different kinds of domains which points to the same software which the download doesn't work for (and I suspect the free trial won't do anything anyway).

Can anyone recommend a reasonable software or easy to understand calculation to check that the interest charged is correct?

Thanks!

Financial

Comments

  • bombpen on 18/07/2014 - 14:46

    You don't really need special software or to buy anything, if you have a copy of Microsoft excel or another spreadsheet program there is a function to perform this task called Payment or PMT, some financial calculators also have it. Fixed interest rate is easy, variable can make it a bit more work.

    Just search for examples using the payment function and that should get you going — it's a bit long to explain it here and I'm sure there are examples out there anyway.

    I have heard before of people doing this and finding out the bank has made a mistake, so it is worth doing.

  • ESEMCE on 18/07/2014 - 14:55
    +1

    I found a very useful spreadsheet online.
    PM sent

    • No on 18/07/2014 - 15:03

      Awesome, thanks!

  • insider2 on 18/07/2014 - 14:56
    -3

    lets say your loan balance is 100,000 and interest rate is 5.30%

    100,000 times 5.30% is $5300

    5300 divide by 365 is $14.52 which is your daily interest

    $14.52 times 30 or 31 is $435 or $450

    That's it.

    If you have an offset account, take that off your principle before multiplying your interest rate.

  • No on 18/07/2014 - 16:17

    Ok I found some software here: http://www.homemoneymanager.com/

    I used some software to change the PDF's to CSV and imported them, manually put in the interest rate changes and it is saying I am out of pocket $2500 from incorrect interest. The only problem is I don't really understand it.

    EDIT: I used insider30's calculations on a bit of the interest that the program said was wrong and my manual calculations came out to exactly what ubank charged me.

  • mskeggs on 18/07/2014 - 18:01

    I can't comment on the software, but a few months ago ANZ sent me a cheque for $4000 in restitution for a stuff up they made calculating my offset mortgage over several years around 2005. So it is definitely worth looking at.

    • No on 18/07/2014 - 18:03

      Out of interest did they just do this out of the blue or did you notice it and contact them?

      • mskeggs on 18/07/2014 - 18:37

        Worryingly, they did this out of the blue.
        I keep pretty good records and would have noticed incorrect loan repayments, but the error appears to have been they only partially off-set my account. So the payments were reduced by the offset, but not as much as the should have been, and this added up over a year or two.

        I got a cheque out of the blue in the mail for $600, saying it was to correct the error on my investment loan. The next day I got another for $4k saying it was to correct my home loan.
        Since this error was literally 8 years ago, I worry what would have happened if I had moved house and the new occupiers had just tossed the letters in the bin.

        I would certainly suggest if you had an ANZ mortgage offset around that time it would be worth a call to say you had heard they had some issues. FTR we had the bundle of homeloan, credit card, bank accounts etc. Maybe the product was called ANZ One? We haven't been a customer for years so I can't definitely remember.

        • conan2000 on 19/07/2014 - 08:53

          There were some news articles on this a few months ago. They did not correctly link offset accounts to mortgages. They did this to me as well in 2012 and I noticed within a couple of days of taking the mortgage out and got them to fix it. They had other issues across many products mostly to do with running old chappy systems and having to have manual intervention to get things done. Some people have even been under charged so your costs could have gone up as well!

  • assetcollector on 19/07/2014 - 09:52

    The PMT function works out the repayment amount for a given principal, term and interest rate.
    The function assumes that the interest amount is posted at the same time as the repayment.
    In practice, banks will calculate the interest daily and post monthly.
    The posting of the interest amount is unlikely to occur on the same day as your repayment is posted.
    To check the bank's calculations, you need to know the balance for each day, calculate the daily interest and check the sum of these interest amounts equals the posted interest amount.
    In the old days, after transactions were posted to accounts, the daily interest would be calculated.
    Banks would close early so these calculations could be done.
    Now it is done by computer.
    It is fairly easy to replicate the calculations in a spreadsheet.

    • ESEMCE on 19/07/2014 - 20:55

      Banks would close early so these calculations could be done.
      Now it is done by computer.

      Yet they still open late and close early…
      I figure it's so all the staff can go out into the back room and dive into the pools of money, Scrooge McDuck style.
      I'm still yet to work out what they do until opening though.. Suggestions anyone?

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