From: google@woodall.me.uk
Newsgroups: uk.finance
Subject: Re: Question about early repayments for mortgage
Date: 28 Nov 2006 07:07:16 -0800
   posting-account=PD8wmAwAAAAX-12HCfGSGclgQNEuSslv


alex_t wrote:
> Imagine following situation:
> I take mortgage for =A3180.000 for the flat (repayment, variable rate,
> 90% of flat price) for 25 years. I make my payments for 10 years, and
> then I sell the flat - say for =A3250.000 (it's all theoretical of
> course).
>
> Now, if at this moment I will decide to repay my mortgage, how much
> would I actually need to repay? (excluding possible early repayment
> charges)
>
> Initial borrowing amount? (=A3180.000)
> Initial flat price? (=A3200.000)
> Total sum of repayment for 25 years? (=A3360.000)
>
> I know, this is weird question, but I'm newbie (and at least a year
> away from my first mortgage, so I will have enough time to learn
> hopefully ;-)

Assuming you've got a standard mortgage with no tie in (usually because
of reduced or fixed rate) then you can (approximate) this in a
spreadsheet very easily.

In one column put the Total of the mortgage.
In the next column multiply the total by the interest rate (interest)
In the third column put 12x your monthly repayments (annual repayment)
Then in the next row (in column 1) the new total for year 2 is the
original amount plus the interest minus the annual repayment.

Copy the formulas for columns 2 and 3. Then repeat for as many rows as
you need.

There are formulas for working out what the annual repayment should be
but it's probably just as easy to make a guess, see if the loan has
been paid off in 25 years and then adjust accordingly.

In practice, many mortgages tend to calculate interest monthly or daily
which slightly reduces the amount you have to pay.

Tim.