Let me shares results running all three methods discussed here. Taking sample on below data
Home1 average balance - 765k
Home1 total interest for 12 months - 21000
Home1 11 months interest - 19500
Home2 average balance -1240k
Home2 December interest - 6000
My method -
11 months average balance calculation with Loan1. -
(750/765) * 19500 = 19117
1 month average balance calculation with loan2-
(750/1240)* 6000 = 3629
Claimable interest= 22746
Zoombo method - let's consider hypothetically that Jan to 11 months sum is 765* 11 = 8415
Dec month avg balance = 1240
Sum of above 2 = 9655
Avg balance= 9655k/12 = 851k
Total interest = 19500+ 6000 i.e. 25500
Claimable interest = (750/851) * 25500 = 22473
Mike9241 method -
I paid loan1 for all 12 months. So avg balance for Loan1 will be 765k
For loan2- ( 1 month * 1240k )/12 = 103
Total avg balance = 765 + 103 = 868
Total interest considering overlap month= 27k
Claimable interest = (750/ 868) * 27000= 23329
Claimable interest ( non overlapping month) = (750/868)* 25500 = 22033
In all 3 methods Mike non overlapping method give best results.
@zomboo- My and your methods are very close. I am considering each loans individually for the duration I am using interest on that month. It does not exceed 750 as I count interest only for that duration.
For e.g. let's take simple example. if my first loan avg balance was 750 for 10 months and let's say I closed it in October.. interest let's say 20k for this loans. I can claim all 20k as it was under 750k
Now I take second loan of 1500k and pay interest of 10k. I can claim 750/1500 * 10= 5k
Total 25 k
Your method = ( 750*10 + ( 1500 +1499) )/ 12 = 312
Total balance as per your method= 750+312= 1063
Claimable= (750/1062) * 3000 = 21186.
21186 is totally wrong here
I hope above example makes it clearer why method is better and more accurate.
I am also inclined towards overlapping method of Mike as it seems reasonable as I paid overlapping interest. I feel it needs some tweaking though to get the accurate results.
