Originally Posted by

**charikaar** Loan amount £117k

I recently took buy to let mortgage with UK bank northern rock for 25 years with first two years fixed at 5.49%. They are charging me around £530 interest only every month. Does anyone how did they come up with this value? i.e forumula used?

i can make 10% overpayment per year without paying any early repayment charges. What will be my monthly interest only payment if i decide to make 10% within 1 month of mortgage start date.

Code:

DATE PAYMENT INTEREST BALANCE
Dec.31 117,000.00
Jan.31 -545.54 545.54* 117,000.00 (31 days on 117,000.00)
Feb.28 -492.74 492.74 117,000.00 (28 days on 117,000.00)
Mar.17 -11,700.00 (299.16) 105,300.00 (17 days on 117,000,00)
Mar.31 -520.90 (221.74) 105,300.00 (14 days on 105,300.00)
Apr.30 -475.14 475.14 105,300.00 (30 days on 105,300.00)
...and so on...

* calculation example: 117000 * .0549/365 * 31 = 545.54

I'd "keep track" of it as shown, assuming "daily balance" calculations.

Then, IF they took more than above calculations, I'd simply ask WHY?

NOTE: assuming the 10% overpayment DURING month adds FUN:

like, how will they handle the interest payment calculation...?

What I show above is SIMPLE (cheapest) interest (no compounding).