Hi Brains Trust,
Quick question as I just need to try and bounce my thought process off something other than myself -
On an interest only mortgage, I'm told by the bank this amount is the 'estimated repayment amount' but may vary due to circumstances etc.
I understand interest is charged daily, and if your late on the payments or have a linked offset then that affects the amount the interest is calculated on. This bank charges you interest on the 1st of each month and does a repayment sweep from a linked offset the same day.
For arguments sake, lets say the amount is $1000. The offset account gets $1200 into it 7 days before the repayment is due. At all other times the offset has $0 in it.
My question - in this scenario, would the estimated repayment amount be $1000 most of the time? If there is a variation, would be up to an additional 10-15% of the estimated repayment amount? What would cause such a large difference?
Thanks much in advance!