Mortgage offer - quotes don't add up?

Lister_2

Just recieved our official mortgage T&C's and payment illustration, but the figures don't make sense to me:

Mortgage £141,000 over 22 years (fixed for 5 years)

1 payment at a fixed rate of 4.69%, including broken interest: £1,166.38
followed by
59 payments at a fixed rate of 4.69%: £857.15
follwed by
204 payments at a variable rate currently 4.74%: £856.90

How can the higher variable rate payments be lower?!?

I'll ring them tomorrow, just wondered if any of you bright sparks knew.

mrs_deadline

Could it be that they recalculate based on the slightly reduced capital sum when the fixed rate comes to an end?

Robert_Sterling_3

Let me start by saying that the Higher interest rate cannot produce a lower monthly rate.

.............. to be continued

Robert_Sterling_3

This is not an official mortgage offer which would need a little more care. It is just an illustration. The monthly payment does not have to be accurate to the nearest penny in an illustration.

So the first monthly rate shown is £857.15
or shall we say £857 if we give our answer to 3 significant figures.

The second monthly rate shown is £856.90
or shall we say £857 if we give our answer to 3 significant figures.

The two figures only differ by 25p

The yearly figures are

£10285.80 and £10282.80 and differ by £3

Each of the monthly payments taken alone has a satisfactory degree of accuracy.

You correctly spotted that logically the two monthly rates and the two monthly payment could not be correct.

.................................................................................

Is the above explanation alright by you CLIO