Home Loan Interest Not Decreasing

Hi,

This could be a newbie question, but I'd ask it anyway as I'm getting very curious with this. :mad:

I keep looking at the statement of my home loan, I'm on 3 years fixed rate loan (7.65%) with Westpac since mid 2007 and will be converted to variable rate in mid 2010. My loan when first drawn was $220,000, since mid 2007 after series of repayment it has come down to $212,304.

From what I understand is that, the interest I pay on my loan would become lower from month to month, but on the statement it tells different story.

1. So I was wondering if anyone could help me to figure out how does the math/interest calculation work?

2. This is the loan for a house/residential property that I currently live in. Is there better things/options I should be doing at this stage, apart from making extra repayment each month? It seems there's still a long long way to go before the loan can be completely paid off :eek:

Here's the recent bank loan statement, I've hidden my account number (*for privacy reason :p)

28 Oct 2009 DEPOSIT WESTPAC BANKCORP DIRECT DR 1,675.00
28 Oct 2009 INTEREST 1,343.92
1 Oct 2009 FEE 8.00

28 Sep 2009 DEPOSIT WESTPAC BANKCORP DIRECT DR 1,675.00
28 Sep 2009 INTEREST 1,390.52
1 Sep 2009 LOAN MAINTENANCE FEE 8.00

28 Aug 2009 DEPOSIT WESTPAC BANKCORP DIRECT DR 1,675.00
28 Aug 2009 INTEREST 1,392.32
3 Aug 2009 LOAN MAINTENANCE FEE 8.00

28 Jul 2009 DEPOSIT WESTPAC BANKCORP DIRECT DR 1,675.00
28 Jul 2009 INTEREST 1,349.47
1 Jul 2009 LOAN MAINTENANCE FEE 8.00

29 Jun 2009 DEPOSIT WESTPAC BANKCORP DIRECT DR 1,675.00
29 Jun 2009 INTEREST 1,396.16
1 Jun 2009 LOAN MAINTENANCE FEE 8.00

28 May 2009 DEPOSIT WESTPAC BANKCORP DIRECT DR 1,675.00
28 May 2009 INTEREST 1,353.11
1 May 2009 LOAN MAINTENANCE FEE 8.00
28 Apr 2009 DEPOSIT WESTPAC BANKCORP DIRECT DR 1,675.00
28 Apr 2009 INTEREST 1,400.12
 
It looks like the general trend of the payment of interest is down. The varying amount of interest from month to month looks to do with the number of days in the month.

The repayment amount is fixed from month to month most likely because you're on P&I and not IO.
 
Hi,

From what I understand is that, the interest I pay on my loan would become lower from month to month, but on the statement it tells different story.


28 Oct 2009 INTEREST 1,343.92
28 Sep 2009 INTEREST 1,390.52
28 Aug 2009 INTEREST 1,392.32
28 Jul 2009 INTEREST 1,349.47
29 Jun 2009 INTEREST 1,396.16
28 May 2009 INTEREST 1,353.11
28 Apr 2009 INTEREST 1,400.12

The interest is going down - from $1400.12 to $1343.92. If you are refering to your monthly payment - as Tess said, since you are fixed, that does not change.

It is pretty depressing seeing that after so much money put in, that after 6 months, you only 'save' $57 a month. I just got my first loan 4 months ago and seeing a similar trend :(

Here is mine - the last one I was charged 1.x months as it was my first one. This is on a $305,000 loan, I have been making extra repayments which is why I (I assume) have a bigger decrease than yours.

03/10/2009 Interest charged $1,273.56
03/09/2009 Interest charged $1,321.07
03/08/2009 Interest charged $2,039.67
 
Thanks for the reply guys.

But I'm still wondering how the heck the interest + principal I pay goes up and down from month to month, hence it confused me although I'm on fixed rate loan. Hence, I'd like to know how the math/calculation work here :cool:

@eXc
It's very frustrating indeed, especially after a few years of making extra repayment. I think when I have the ability to get a new loan and service the repayment, I'd go buy another property and make my PPOR as IP, that way the interest I pay becomes deductible ;) Hmm, gotta work harder
 
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