All Topics / Finance / Extra Repayments Calculator

Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of jasevr4jasevr4
    Member
    @jasevr4
    Join Date: 2005
    Post Count: 19

    Hi everyone,

    Just a quick question that hopefully has an equally quick answer..

    Hypothetical:
    $200,000 loan
    30 year term
    7% interest

    Repayments are $1330.60 Monthly.

    My partner and I want to make extra repayments while we can afford to (before we have kids).

    Say we added $200 on top of the Monthly $1330.60 for 5 years at the start, then just made the normal $1330.60 afterwards, how much quicker can we pay off our house?

    Is there a calculator for this at all? I can’t find one that is suitable. All of the online calculators just it out from a certain year, for the remainder of the loan term.

    Any help is greatly appreciated![biggrin]

    Profile photo of Stuart WemyssStuart Wemyss
    Member
    @stuart-wemyss
    Join Date: 2003
    Post Count: 598

    No calculators that I know of.

    I did a quick spreadsheet and if you repay $200 extra every month for the 1st 5 years only then you’ll repay the loan in 25.7 years (308 months). That is, you will repay 4.3 years early and save $58,142. Go for it!

    Cheers

    Stu

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    We use a spreadsheet for our clients however this may help you achieve what you are after

    http://www.infochoice.com.au/modules/distribution/10346/extra_repayments.asp

    Richard Taylor
    Residential & Commercial Finance Broker
    **Lodoc Commercial loans from 7.19%**
    Licensed Financial Planner
    http://www.yourstatefinance.com
    [email protected]
    Ph: 07-3720 1888

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of elkamelkam
    Member
    @elkam
    Join Date: 2006
    Post Count: 722

    I don’t know if this hypothatical loan is in fact a reality already but if not or if the facility expists in the loan, you might want to think about an offset account instead.

    That way you could put both pay packets into this account and each dollar that stays there, even for a few days, saves you interest (assuming variable loan).

    Cheers
    Elka

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Ekam

    100% offset facilities are also available on fixed rate loans.

    Richard Taylor
    Residential & Commercial Finance Broker
    **Lodoc Commercial loans from 7.19%**
    Licensed Financial Planner
    http://www.yourstatefinance.com
    [email protected]
    Ph: 07-3720 1888

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of elkamelkam
    Member
    @elkam
    Join Date: 2006
    Post Count: 722

    Hello Qlds007

    I didn’t know that. Thank you for the info. Can you give me a clue as to who provides this in Melb?

    My niece is looking to buy herself a place to live in and is asking me which loan she should take out. I was thinking that 3 yr fixed and then variable might be the way to go.

    Would value your opinion.
    Elka

    Profile photo of jasevr4jasevr4
    Member
    @jasevr4
    Join Date: 2005
    Post Count: 19

    Thanks for the help everyone!

    Qlds007: I have seen those calculators, but unfortunately they start counting after a certain number of years, rather than before.

    Stu: That is a great help! That was the sort of info that I was looking for. Would you mind telling me how you worked that out?

    Thanks

    Profile photo of RealEstateQueenRealEstateQueen
    Member
    @realestatequeen
    Join Date: 2005
    Post Count: 69

    Elka,
    My fiancee is a home loans lender for a popular bank, and we have structured our loans all the same way. Make sure she gets the honeymoon rate first up, and ensure the rate is still good after. You can save alot of interest taking the honeymoon rate first up. Then we left them at variable rates, only because with fixed rates, the loan itself it pretty much fixed. You generally cant make extra reapyments, redraw, or anything like that, it can be quite restricting. What she should do, is budget for the repayment if it was one whole percent higher, that way if interest rates do go up, she has a back up plan. If she can budget for that, and still afford it, she should make the extra repayments too, because that will allow to fall back on it if they do rise. They will only rise by half a percent, according to the financial review anyway, so thats a good way of having a back up plan.
    Any questions, we would be happy to help.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Elka

    Hate to put a dampner on your fiance’s ideas but i just agree why you would take a Honeymoon rate initially unless there was a reason for it.

    With the 5 major lender and i assume that your fiance works for one when you say a popular Bank there is a early repayment penalty if the loan is repaid within the first 3 years. This makes the rate unattractive.

    In addition most of the basic variable products are only slightly higher than than the honeymoon rate and if you are using a Pro Pack then you will be able to take up a a rate which is upto 0.8% less than the SVR.

    Many Fixed rate products allow additional repayments upto a given amount each year and also several lenders allow you to link a 100% offset account to a fixed rate product with no maximum deposit held in the account. (other than the loan balance).

    Not sure what section of the Fin Review you are referring to but would be happy to hear so we could clarify when they predict the rate increase is going to happen. Perhaps the Bank’s haven’t heard yet as the medium term fixed rates havent yet gone up accordingly.

    To structure your loans using a honeymoon rate is niave to say the least. Banks love customers like you who believe that a lower rate of interest initially will save them over the long run. Why do you think so many retailers offer interest free credit on their items on the basis that they make their money after the IFP has expired and the full rate of interest comes into effect.

    Richard Taylor
    Residential & Commercial Finance Broker
    **Lodoc Commercial loans from 7.19%**
    Licensed Financial Planner
    http://www.yourstatefinance.com
    [email protected]
    Ph: 07-3720 1888

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of adambcadambc
    Participant
    @adambc
    Join Date: 2003
    Post Count: 145

    jasevr4,

    I’ve developed a simple excel spreadsheet that does exactly what you’re after. I’d be happy to send it to you if you PM your details to me.

    Thanks must go to Jaffasoft for providing me with that elusive equation that works out P&I repayments on a loan – without that, this calculator would never have happened! I also therefore recommend people to Jaffa’s website – http://www.jaffasoft.com – as it has some other really good calculators.

    Cheers,

    Adam

    Oasis Finance
    for your Vendor Finance solutions
    Achieve the Dream!
    [email protected]

    Profile photo of elkamelkam
    Member
    @elkam
    Join Date: 2006
    Post Count: 722

    Thank you Audrey for your reply. However I have to agree with Qlds007. I don’t see the point of a honeymoon period myself unless your really tight for cash and need that little bit extra to help pay for some of the expenses of buying and then moving to a new house.

    Richard do you have the name of a lender who allows you to have a 100% offset aaccount on a fixed rate product in Melb please.

    [offtopic] I don’t have a fiance. My husband would object. [biggrin]

    Cheers
    Elka

    Profile photo of LysannderLysannder
    Member
    @lysannder
    Join Date: 2006
    Post Count: 2

    Hi,
    Dont know if this helps … i just set up my PPOR with an interest only loan and i am paying 200 per fortnight principle of this… as having a P&I loan worked more expensive for me. Besides … if i have a bad pay i can always skip a Principle payment… also worked out that by paying this 220 p/f im actually saving a Whopping .04c per day in interest each payment :)) compounding this over 365 days it begins to add up…
    Cheers
    Happy Investing

    Lys

    Profile photo of adambcadambc
    Participant
    @adambc
    Join Date: 2003
    Post Count: 145

    jasevr4,

    I’ve just gone back and actually put your example into my calculator (which I’ve only made a weekly thing at this stage – someday I’ll get around to giving the option of fortnightly or monthly, but I’m not THAT bored just yet!), and by my calculations, if you repay weekly, you will be paying $305.83pw. If you pay an extra $50pw (=$200pm / 4) you will pay off the loan after 1316 weeks, or about 25yrs 2mths, and you will have saved a whopping $76,151.67 in repayments! The power of compounding interest at work…

    By the way, I have previously been referred to the following sites too…

    http://www.ossix.net/mortgage/
    http://ray.met.fsu.edu/~bret/amortize.html

    They might also be of some assistance to you.

    All the best,

    Adam

    Oasis Finance
    for your Vendor Finance solutions
    Achieve the Dream!
    [email protected]

    Profile photo of jasevr4jasevr4
    Member
    @jasevr4
    Join Date: 2005
    Post Count: 19

    Wow! So it looks like it’s really worth it!

    I guess we are considering this for two reasons (that are derived by one reason)…

    We plan to have kids in around 5 years time.

    1) If we can afford to, we will make the “required” repayments after 5 years, and save ourselves almost 5 years, and according to Adam, $76,151.67. [blink]
    2) If we can’t afford to (with kids, so this might be more realistic), we can refinance and make our repayments less, but stretch it out over the 30 years again.

    I have sent you a PM too, Adam. [biggrin]

    Thanks!

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