My repayment is never rate/12 mine is different for months with 28, 30 and 31 days. But my bank auto draws it off account and they just take their 28/30/31 days of interest on anniversary date.Sorry, to hijack, stumbled across this after trying to find out more about Capitalising Interest.
This is the situation:
Loan is an investment and balance starts off at X, with Interest Only.
End of the month, interest is calculated at RATE * days in month / 365 and added onto loan balance.
Repayment made on anniversary of opening loan (at a later date) and is actually RATE / 12!
So, the loan balance actually fluctuates, just a small amount, but it seems to go up for shorter months and down for longer months.
Any thoughts? Why do they have to try to reinvent the wheel...