Setting up mortgage payments

[prl]

On 11/01/13 04:42, Derek Atkins wrote:
> Hi,
>
> prl <prl at ozemail.com.au> writes:
>
>> I'm not sure what others were talking about, but I wasn't talking
>> about problems setting up mortgage schedule payments. The minimum
>> payments I can make on my mortgage are fixed, and at intervals that
>> GnuCash can work with, so that bit works very nicely in GnuCash. I
>> make advance payments at irregular times that suit me, and they're
>> entered as manual transactions.
>>
>> What I can't do with any useful level of convenience is calculate the
>> interest that should be debited at the end of each month. That's my
>> main variable, and its calculation is complicated by all the factors I
>> mentioned in my earlier email.
> This IS what I am talking about..  GnuCash's mortgage & loan druid,
> using the SX features, *can* compute the principal/interest splits in
> certain, limited situations.  However it cannot handle pre-payment of
> principal (it would need balance-as-of-date to implement that).  And it
> cannot handle interest rates that change unpredictably.
>
There is both an in-principal problem and a bug in the mortgage druid 
that prevents this for my mortgage.

The mortgage and loan druid cannot, by design, as far as I can see, 
generate the required SXs (and the plural is part of the key) that 
modelling my mortgage requires, even assuming no interest rate changes 
or advance payments.

The druid generates an SX that assumes that interest and principal 
payments occur at the same time and are calculated to the same dates.

This is not a suitable model for my mortgage. My interest is calculated 
daily and charged to the mortgage monthly, 12 times a year on the last 
day of the month. I make fortnightly payments, 26 times a year on 
alternate Mondays, in this year, two payments a month except in April 
and September, where there are three payments. The dates in the month 
when the payments are made does not follow a simple regular pattern.

I don't believe that this can be readily modelled by a single SX with 
principal and interest splits using the existing, or even the proposed, 
functions. I don't think it's possible to do it with two SXs (one for 
repayments and one for interest), even with a balance-at-date function, 
because the variability of the payment dates with respect to the 
interest debit date.

The bug that foils any attempt to use the druid with any level of 
convenience for payment intervals other than monthly is that changing 
the payment Frequency (Payment screen) does not change either the 
divisor of the annual interest rate (it remains at annual/12, no matter 
what the payment frequency is set to), nor does it change the number of 
payments (which remains at the number of months from the Length field in 
the Loan Information screen). Changing the pmt() function in the Amount 
bar makes no difference to the amounts displayed in the Review screen, 
and going Back from the Review screen to the Payment screen shows that 
the pmt() function has been set back to its original, wrong, values.

This can, of course, be fixed by going to the generated SX and fixing 
the values in the ipmt() and ppmt() functions, but that really makes the 
use of the druid a bit pointless in the first place.

But even if the druid generated the correct payment function parameters 
for other than monthly payments, they would still be wrong for my 
mortgage and not match the transactions on my loan statement.

Fortnightly mortgage payments are fairly popular in Australia, because 
salaries are frequently paid fortnightly.

Adding a mortgage offset account (which I could use, but I don't intend 
to), would make the whole thing more complex because of the calculation 
of interest on the daily difference between two accounts.

So for the moment, I'll be sticking with my present way of doing things 
of using an SX for my repayments and managing interest on the mortgage 
in the same way that I do for my asset accounts: from the statement.

Peter