mortgage payments: split between principal and interest?

[Cam Ellison]

Matt Price wrote:
> perhaps a stupid question:  
>
> I'm trying to schedule payments on our existing mortgage to my new
> gnucash file.  I'd like to use the mortgage/loan druid but it doesn't
> seem to be quite flexible enough for what i need.  
>
> I've checked the actual amortization schedule on my bank website, and we
> have 662 weekly payments left on a variable-rate mortgage with a
> remaining principal of 213258.21 and a current rate of 2.15% (I don't
> know how often the rate changes, though i think it's not more often than
> quarterly).  the druid generates a payment formula that looks like this:
> pmt( 0.02150 / 12.00 : 156.00 : 213259.21 : 0 : 0 )
> but that ends up getting the amount wrong.  can anyone suggest an
> improvement, or suggest where to look for more help?
>
>   
I've never been happy with it myself, and do it by hand.  In any case, 
with a variable rate any other approach is full of problems, not to 
mention that Canadian mortgages work on a 6-month calculation, not a 
full year (I think that may be part of your problem).  That's what 
"semi-annually not in advance" means.  Your effective rate is 2.162% 
annually.  That's one of the side benefits of being Canadian, and may 
help to explain why our banks are the only ones that are worth anything 
these days.  We keep them flush.

Our home mortgage is paid weekly, and I calculate the weekly rate, 
record it in the transaction, and use it to determine the interest in 
each case.  Here's the formula for the interest rate:

e^(7*ln(1+int/2)/182.5)   where e Napier's e (2.718281...), ln is the 
natural log, and int is your annual interest rate.  Based on your 
current rate, that would be .000410212, which yields an interest amount 
of 87.48 for your current principal.

Any scientific calculator (there should be one on your computer, or you 
can use a spreadsheet) will do this for you.

I do a split transaction in the mortgage account:

Liabilities:Mortgage                       62.52
Expenses:Mortgage Interest           87.48
Assets:Current Assets:Chequing                  156.00

There will be some variation from the bank's calculations, but you 
should be fairly close.  Any time the bank changes the interest rate, it 
must advise you - most will give you a month's warning - and tell you 
the effective date.  If you make use of online services, you should be 
able to access the mortgage, which will tell you the outstanding 
principal.  You can make any adjustments to the principal and interest 
in a separate transaction.

It works for us - we have our own home and 4 revenue properties, and 
that's how we do it.

HTH

Cam