How do they work out the monthly payments?

no1gymbunny

I took out a 100% interest only mortgage in May 07 with B&W. The 2 year fixed rate of 6.49% comes to an end in May 09 (that's where my maths ends I'm afraid!). I borrowed £140,499 and my current monthly payments are £759.87.

How do they work out the monthly payments? What would they be now? I appreciate it will have changed by May!

_Andy_

It will be at the standard variable rate.

no1gymbunny

Thanks, but how do i find that out?

skintandsad

On an interest only loan, you calculate the payments as follows:

Loan amount (£140499) x Interest rate (6.49%) / 12 = monthly payment

so 140499 x 6.49% = £9118.39 / 12 = £759.87

A quick call to your lender to find out what the current variable rate is would give you an "indication", however you could also check whether you are able at the end of the term to fix your lending for a further period (this depends on the terms of your existing mortgage).

BlameTheGame

brown1950 wrote: »

Barclays/Woolwich SVR rate w.e.f. 1st March = 4.99%

this was posted in another thread ^^^^^

no1gymbunny

I've just rung B&W and it's currently 3.99%. So if the fixed rate ended now, my monthly payment would be £467.16 :-) What is the relationship between the standard variable rate and the BoE interest rate?

beecher

no1gymbunny wrote: »

I've just rung B&W and it's currently 3.99%. So if the fixed rate ended now, my monthly payment would be £467.16 :-) What is the relationship between the standard variable rate and the BoE interest rate?

There's no real relation as such - they can pass them on, or not. B&W's SVR is under review after today's BoE rate cut so might be lower. Have you thought about what you're going to do when the rates go up again?

no1gymbunny

Cry probably! There's not enough equity to remortgage yet and probably won't be for a while so I'll have to be careful and stash what I save on my monthly payments. Not sure where though. There's no decent saving accounts about. An isa might be an idea though. Or under the matress!

beecher

Halifax's Regular Saver gives 5% and you can save up to £500/month. Might go down soon though I suppose. You could just keep your payments the same, though by looking at your signature maybe you're best putting it towards debt?

no1gymbunny

I did think about that actually. I was just about to ask what if the mortgage rate goes higher than it is now and my payments go over what I'm paying now, but if my debts are lower (or hopefully non-existent!!) it won't matter

Trying_to_be_good

Once you're on the SVR you can probably overpay as much as you like without having to pay any penalty.

Try really hard to keep your payments the same as they are now (or even pay a bit more) to start repaying some of the capital you've borrowed and it'll be much easier to remortgage when you want/need to.