Interest on Loan

gaz wac

Hi
Wonder if anyone can help. I took a loan of 10k out of the credit union and got a secured loan rate of 5% as im able to cover it with savings. Just reading the contract and the total repayment is €10,961.00. Im just trying to work out how they are getting this figure? Ive rang them and not one of them could give me an answere ( we just press the buttons and the computer adds it up ) ! they said the interest is based on a reducing balance but I still cant get that figure?

Anyone?

Cheers

p.s this is for home improvments can i claim interest relief?

Ogham

How long is the loan for? How much are the repayments a month?
Why don't you use your savings if you have them - instead of giving them 961 euro in interest?

dotsman

Impossible to say without knowing the details of your loan. What is the term? Are you repaying capital and interest? Are there any repayment exceptions? Is the interest variable or fixed?

Calculating the interest on a loan is not a simple process and depends on the above factors as well as others (plus you'd have to be a genius to be able to do it in your head/on a scrap of paper;)).


With regards home improvements, the revenue site says:

Revenue wrote:

A qualifying loan for the purpose of mortgage TRS is a secured loan, used to purchase, repair, develop or improve your sole or main residence, situated in the State. You can claim mortgage tax relief in respect of the interest charged/paid on your main residence. You can also claim mortgage tax relief in respect of a mortgage paid by you for your separated/divorced spouse, and a dependent relative (i.e. widowed parent, elderly relative) for whom you are claiming a dependent relative tax credit. However, your mortgage TRS entitlement cannot exceed the maximum TRS allowance

As far as I know, improvement would be considered getting the kitchen redone or knocking a wall etc and not to "get new curtains, or repaint the living room etc" (ie the structure of the house is bing altered). You would need to hold onto all receipts (ie, the builder's or the Shop from which you bought the materials if you're doing DIY) in relation to this. However, I'm not 100% on this so I'd confirm it elsewhere before trying to claim your credits. If you don't get an answer here, try your bank or Revenue themselves.

gaz wac

Thanks for the replies.

The principal is €10,000. I requested it to be over 60 months ( 5yrs), paying 190 off loan and 60 into savings, but she forgot this and calculated it over 44 months paying the full 250 off the loan. ( 43 instalments of 250 inclusive of interest, with a final instalment of 211.23 inclusive of interest) The interest is 5% variable.

Building work is knocking down walls and new kitchen so ill look into the tax relief.

Thanks for the help.:)

Ogham

By my calculations - a 5% rate over 44 months on 10k should cost you a total of 966 - 44 payments of 249.22 a month. So - give or take a few cents a month the figures are OK.

gaz wac

Thanks Ogham,

can I ask how your getting that figure, totally agree that its the correct amount, but just want to know how to work it out.

cheers