Canadian Mortgage Calculation
Hi,
@ Moneydance team: do you have any future plans to include Canadian mortgage calculations?
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1 Posted by jpx_6 on 12 Jan, 2022 03:13 AM
update please?
Support Staff 2 Posted by Ethan on 16 Jan, 2022 08:35 PM
Hello,
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.
Ethan
Infinite Kind Support
3 Posted by GoneCamping on 22 Jan, 2022 06:45 PM
This is a VERY old request... See this topic, specifically my post (#3, section (A).)
https://infinitekind.tenderapp.com/discussions/general-questions/624-canadian-mortgage-capitalization-setup
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.
Support Staff 4 Posted by 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.
Ethan
Infinite Kind Support
5 Posted by GoneCamping on 22 Jan, 2022 07:54 PM
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.)
https://www.yorku.ca/amarshal/mortgage.htm
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?
6 Posted by GoneCamping on 22 Jan, 2022 08:49 PM
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.
7 Posted by GoneCamping on 16 Apr, 2022 05:58 PM
Hi Ethan,
Any news on when this could be implemented? We Canadians have been waiting for quite a while on this... and it shouldn't be that difficult to implement.
Regards,
8 Posted by GoneCamping on 07 Jun, 2022 12:43 AM
So, another major Moneydance update rolled out recently, and we still don't have this...
13 years, yes, YEARS, have gone by since I've talked about this way back then... and over the years, several have been asking for this.
System closed this discussion on 06 Sep, 2022 12:50 AM.
jpx_6 re-opened this discussion on 11 Jul, 2024 05:23 AM
9 Posted by jpx_6 on 11 Jul, 2024 05:23 AM
update please?
10 Posted by GoneCamping on 28 Jul, 2024 02:11 PM
jpx_6, I've simply decided to no longer give any money to Infinite Kind. I've not upgraded to their latest version. They clearly don't care for Canadian users. Maybe we are not a significant number of users of their software, but I've given enough of my money over the YEARS, and I STILL don't have satisfaction of having this major irritant fixed. I'll be taking a look once in a while, but until this actually gets fixed, I'm keeping my current version. By then, I possibly won't even have a need for this, as my mortgage will be paid off... ;-)
11 Posted by dwg on 28 Jul, 2024 09:37 PM
In general I think TIK has avoided country specific capability. The only exception I can think of is Direct Connect.
With Loans there are many different ways that institutions can use when calculating interest. From fixed to daily calculations and a range in between, and then you can get into offset accounts as well. It could well be a very long path to allow for them in the software.
12 Posted by dwg on 29 Jul, 2024 12:10 AM
When I worked for a bank back in the middle ages we used three principle types of calculations.
Fixed interest loans, no need for the software to work out anything, fixed payment amount, no change in interest for early repayments etc.
Monthly rest loans where principal repayments would be applied once a month to determine loan balance outstanding and calculate interest amount.
Daily rest loans where principal would be applied daily and so the loan and interest amounts would also be calculated daily.
I know that quarterly and yearly rests are also used in some places.
13 Posted by GoneCamping on 01 Aug, 2024 02:02 PM
@dwg, there is only ONE basic interest rate formula... it's not rocket science. What changes, are the assumptions being made. For instance, if you are compounding weekly, are you compounding at 1/52th of the annual rate, or 7/365th of that same annual rate? Big difference when it comes to important amounts usually seen in mortgages. Earlier in this thread, I provided Excel files that demonstrate this.
This is not a "country specific" item, it's just math. Keep the current way of doing the math, with the variables (period, rate, etc.) setup as VARIABLES (and not assumed constants.) These variables can then have default values which match the needs of the 80% population/customer base (such as 1/52 for weekly compounding), BUT, allow an extra dialogue that would have me change these assumptions (i.e. 7/365 for my country's compounding period rules (i.e. cater to the needs of the other 20% of the customers.))
As a software developer myself, this is not hard. Maybe only 5 people on the planet care for this (but I'm sure there are MANY Canadians that use MD), and if this is the case, then I'm OK with TIK in not doing anything about it. But I'm not going to keep paying for something that I haven't been able to use correctly for over a DECADE.
System closed this discussion on 31 Oct, 2024 02:10 PM.