Annual interest charge. Suspiciously low?

shinypenny · 5 March 2018 at 3:39PM

Hi all,

I've just received my annual mortgage statement and I'm astounded at the interest charge. It's so LOW!! Is this a mistake?

Balance of £104,000 paying 2.44% interest. Just into year 3 of a 5 year fix.

My interest charge for 2018 is/was £450.
Last year it was £2,650 on a £114,000 balance and the year before £3,000 on a £120,000 balance.

Last year I managed to pay £4,500 in additional payments (combination of extra £150/mth payment and a small inheritance). Has this really made SUCH a difference to the interest charged or is it a big mistake?

(I've a bottle of bubbly on ice for when it drops to £100,000 so this might get opened sooner rather than later!)

If it is a mistake, how long until the mortgage company realise?

silvercar · 5 March 2018 at 3:59PM

So your mortgage is a bit over 100,000 and the interest rate is 2.44%, so you would expect the interest charged to be a bit over 2,440 for the year. You were charged 2,650. So it looks about right without even using a calculator. Why are you surprised?

Typhoon2000 · 5 March 2018 at 4:05PM

So interest is about £211 per month and we have had a little over 2 months in 2018.

AnotherJoe · 5 March 2018 at 4:14PM

When you say My interest charge for 2018 is/was £450. what do you mean?Is that just for Jan and Feb 2018? Or do you mean for the 12 months up to and including Feb 2018?

Tom99 · 5 March 2018 at 4:22PM

2 months interest so far this year so £450 sounds about right but you will still have to pay the next 10 months of 2018.

shinypenny · 5 March 2018 at 4:25PM

Thanks for the replies.

Just to confirm:

The mortgage was opened in January 2016
Starting balance - £120,000
Interest charged - £3,000
Payments made in 2016 - £8,800

Balance as January 2017 - £114,000
Interest charged - £2,650
Payments made - £12,600

Balance as January 2018 - £104,000
Interest charged - £450.

As I've paid 3 monthly mortgage payments now in 2018 my balance as of 01 March 2018 is £101,800.

All my statements are the same detailing the opening balance, the total interest charged and the monthly repayment amounts. What's confusing me is that £450 is so much lower than £2k.

Tom99 · 5 March 2018 at 4:37PM

shinypenny wrote: »

All my statements are the same detailing the opening balance, the total interest charged and the monthly repayment amounts. What's confusing me is that £450 is so much lower than £2k.

[FONT=Verdana, sans-serif]Its because the £450 is 2 months interest not 12 months. The mortgage co cannot tell you the amount of interest in 2018 until the end of the year when all your payments, including any overpayment, have been made.[/FONT]

shinypenny · 5 March 2018 at 5:04PM

Okay - thanks, that makes sense.
I'll double check at beginning of April but thanks to everyone for taking the time to respond.

Annual interest charge. Suspiciously low?

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