SUMMARY I have a mortgage setup in KMM 4.7.2 which I have been paying off for almost 10years now, which means the balance NOW is less than half of what it was initially. Now I am renewing my mortgage term with different rate, and to accelerate the payoff of this loan I have voluntarily asked for an amortization smaller than initially remaining. The effect is a somewhat larger payment. The issue is that when I change the parameters of the loan (rate, remaining payments, etc), KMM insists in reusing the initial loan amount (from 10years ago) instead of the RESIDUAL balance (now) which is nonsense and as a result, the calculated "balloon" payment is insanely large. STEPS TO REPRODUCE 1. Setup a loan in KMM 4.7.2 2. Pay it off for a while until balance is much lower 3. Change settings of loan and see the balloon payment gets miscalculated OBSERVED RESULT Balloon payment calculation seems to use this (Initial loan amount) - (Remaining number of payments) x (payment amount) = (Balloon payment) EXPECTED RESULT Should use this (Actual/remaining loan amount) - (Remaining number of payments) x (payment amount) SOFTWARE/OS VERSIONS Linux/KDE Plasma: Mint 17.3 / KDE 4.14.2 ADDITIONAL INFORMATION KMM is outdated on my system because compiling from source doesnt work (apparently Mint 17.3 is too "old"), and no newer KMM packages are available for Mint 17.3. Using a newer version of KMM would require either upgrading this entire computer.
This probably applies to newer versions as well. I have not checked it but the code in that area did not change very much since then. So I took off the specific version in favor of 'unspecified'. Note: in case you cannot update you might want to try running off an appimage which can be found on https://binary-factory.kde.org/job/KMyMoney_Stable_Appimage_Build/
I have posted this ticket thinking it was a bug rather than me trying to do something not the proper way, but I cannot believe I would be the first/only one reporting this since this is, IMO, a major issue. Can someone try this on a similar or newer KMM release and report if this is specific to my release or maybe even just to my setup? Create a large loan, process hundreds of scheduled payments, change the terms (rate, number of payment remaining < calculated to simulate accelerated amortization) and see the balloon payment getting miscalculated
It's certainly not you doing anything wrong. However, I think of it less as a bug (incorrect code) than a design decision not to handle this situation. (As Thomas says, that code was written long ago, so there is probably no way to be sure of what was intended at the time.) As a workaround, I would just create a new schedule, staring with the current balance and remaining payments, and then close the original schedule. Separately, even if you are able to use the appimage build, support for Mint 17.3 ends this month, so you are going to need to upgrade in the near future, or find you are unable to use newer versions of more and more programs.
Seems like I wasn't doing anything wrong but I asked because 5 years ago I did renew my mortgage term (so did exactly the same as Im trying to do now) and somehow I made it work back then, but again, I didnt manually reduce the remaining payments left (amortization). I wonder, if KMM is not meant to handle this kind of situation, why in the "Edit Account > Modify Other loan information" KMM let me change the number of payments? Is it assumed that the number entered there is the number of payments from inception to full payoff? If so, this is incoherent. The loan has obviously been processed to an extent, so KMM should detect this and there on assume this is from NOW until full payment. Now the real question is: if I create a new schedule to simulate what the loan wizard would normally do, how will KMM compute interests and interest payments and properly calculate residual balance of the loan? If I create a manual schedule, and lets say enter $300 as payment on the capital, and $80 of interests, this will be the same from first payment until the last, which is NOT the case with an interest loan.
I tried to duplicate this. I created a loan running for 34 months and recorded the first 12 months with a schedule on a monthly basis. The payment was a fixed amount of 300 each month which was split between principal and interest. The values were changing for each payment. Everything fine. At the end of the twelve months I decided to increase the monthly payment (as in your example). Here's what I did: I started the loan editor and changed the following things: - set the number of payments to 0 (which will force to calculate it) - increase the monthly payment to 350 and - set the baloon payment to 0. Then calculate the loan which reduces the number of payments to 29 and leaves a different baloon payment (in my example). Finish the editor. This will update the schedule. The next payment I recorded came in with 350 as sum and a higher prinicpal. Interest was a bit smaller than in the payment before which is ok. I did not change the interest rate It seems a bit confusing to see the initial amount of the loan but it does not hinder to change the values and the calculations are done right after the change. So I turn this into a wish list item to improve the loan editor to use the current balance as loan amount to reflect the actual situation.