# Calculate interest on mortgage

I have been trying to arrive at the same interest figures that my bank charged me on my mortgage, however I am off by a few dollars so I must not be using the correct formula. I have a 30 year principle + interest loan, on a fixed interest rate for 5 years. It has a 0.7% offset account - ie. only \$7 in every \$1000 are deducted from the loan. I am trying to balance the calculations for the first month of the loan which was many years ago (the year had 365 days). The principle was \$418,000 and the interest rate was 6.59% at that time.

Here is a screenshot of the relevant part of the first mortgage statement (I have blanked out the sensitive information, but no money amounts have been removed):

And here is a screenshot of the relevant part of the second mortgage statement, which follows directly on from the previous screenshot (again, I have blanked out the sensitive information, but no money amounts have been removed):

And finally the relevant part of the 0.7% offset account statement over the same period (again, I have blanked out the sensitive information, but no money amounts have been removed):

So the question is, how has my bank arrived at the interest value of \$2,260.34 (on 28 September)?

If I try a basic calculation that does not take into account the 0.7% offset account then I can get close:

``````30 days * (\$418,000 - \$500) * 6.59% / 365 days = \$2,261.36
``````

This is off by \$1.02, but really it might as well be off by \$1000 since it is incorrect, it is not useful.

So then I tried computing the balance daily, taking into account the partial offset account, but I get no closer (the cells in yellow should match but they do not):

Extra information that may be useful

• This mortgage is with BankSA in South Australia
• The only fee that I am aware of associated with the mortgage is the "Advantage Package" Annual Fee of \$395 which you can see from the above statements was deducted on 1 September from the offset account
• Stamp Duty was paid via a conveyancer - this bank was not involved in that payment - it was made from an entirely different bank. Likewise with council rates, the fee for registering of the property via the Land Titles Office, and a variety of other fees and expenses.
• According to the conveyancer, the "anticipated settlement date" was on 30 August, and all payments to the conveyancer were received on time, so I assume this is the correct settlement date
• Accumulated rounding error in the functions? – RonJohn Aug 31 '19 at 13:37
• hi @RonJohn, i thought of that, but i have tried roundup and rowndown to the nearest cent and it is still not correct – mulllhausen Aug 31 '19 at 13:38
• I'm on the road so I can't calculate if it fits, but be aware that banks often consider a year to consist of 12 months with 30 days each. So you save a bit of interest in 31-day-months, but lose a bit in Feb. maybe using 360 and 30 matches? – Aganju Aug 31 '19 at 15:12
• Thats good to know @Aganju, but I don't think it applies here. I tried recalculating using 360 days instead of 365 but the amount is much more incorrect: `30 days * (\$418,000 - \$500) * 6.59% / 360 days = \$2292.77` (incorrect by \$32.43 now) – mulllhausen Sep 2 '19 at 4:26
• Have you checked the loan payment statement on additional cost e.g. stamp duty, services tax, government tax, etc? – mootmoot Sep 2 '19 at 11:58

• Careful - `round` always rounds up on exact ties (0.5 => 1, 1.5 => 2, 2.5 => 3). Banker's rounding rounds to the nearest even if there's an exact tie (0.5 => 0, 1.5 => 2, 2.5 => 2). – Roy Tinker Sep 6 '19 at 19:54