Ethan on 16 Jan, 2022 08:35 PM
Can you clarify in a bit more detail what would need to be added to the mortgage calculation function to make it more relevant to Canadians? I've done some online searching, but it's not quite clear to me what's different with mortgages in Canada versus the United States.
Basically, mortgages up here are calculated (for weekly payments) on the basis of 7/365th of the interest rate as opposed to 1/52nd of the rate. This difference is significant when talking mortages, which are larger loans, typically. I have to manually update all transactions in MoneyDance on a monthly basis when I get my bank statement of account.
Ethan on 22 Jan, 2022 07:52 PM
Ah, thanks for the clarification. You're right that this is a very old request based on that thread. I'll create a suggestion ticket for our developers to consider for adding these option in a future release.
I'm not familiar with how US mortages are setup, but here's a primer on Canadian ones. I think the difference between my Excel file (which is identical to my bank's statement) and the "incorrect" (for us Canadians) MoneyDance loan data is related to 2 things: the compounding (2 times a year, by law, in Canada) and the precision of what constitutes a "week" of interest (i.e. the aforementioned difference between 1/52 and 7/365.)
I'd like to provide an Excel test for you to see and compare, but I'm having trouble re-creating the payment schedule MoneyDance is proposing... What formula are you using, assuming I select the "52 payments a year" option?
OK, I think I figured that US mortgages are compounded monthly (vs. semi-annually for Canadian ones.) To see the difference this makes, I've created an Excel sheet. Assumptions: $100,000 initial amount, 5% interest rate (annual), $300.00 weekly payment schedule. As you can see, after 401 weeks (a bit less than 8 years), the 2 Canadian mortgages are "paid off", with slightly different "balloons" (small ones!) The only difference between the 2 Canadian ones are the 7/365 vs, 1/52 week. The US mortgage, on the other hand, is also paid up in 401 weeks, but with a larger balloon, almost the equivalent of an extra payment!
This is just an example illustrating the differences between the monthly and semi-annual compounding, and shows how us Canadians using mortgages need to always manually update transactions in Moneydance.