Repayment mortgage vs interest only

raja_no_1

If I were to take a mortgage on a repayment for a loan amount of £100000 @ 5.63% basis for a term of 30 years,


This is what I would be repaying as part of the Interest and Principal everymonth untill 240 months (30 years).

=================================
Months |Opening |Interest |Principal |Closing
=================================
1 100000 469 107 99893
2 99893 469 107 99786
3 99786 468 108 99678
4 99678 468 108 99570
5 99570 467 109 99461
6 99461 467 109 99352
7 99352 466 110 99242
8 99242 466 110 99131
9 99131 465 111 99021
10 99021 465 111 98909
11 98909 464 112 98797
12 98797 464 112 98685
13 98685 463 113 98572
14 98572 462 114 98458
15 98458 462 114 98344
16 98344 461 115 98230
17 98230 461 115 98115
18 98115 460 116 97999
19 97999 460 116 97883
20 97883 459 117 97766
21 97766 459 117 97649
22 97649 458 118 97531
23 97531 458 118 97412
24 97412 457 119 97293
..
..
..
...
238 53735 252 324 53411
239 53411 251 325 53085
240 53085 249 327 52758


Hence initially I would be paying more on interest and less on the principal every month.

This would change gradually as can be seen that the interest will decrease bit less and the principal will go up a bit as time progresses.

Now my specific question is => will I be losing out money to the banks if I were to part with the current bank(lender) after lets say 2 years
instead of the 30 years, and remortgage with another lender keeping in mind what I just said above that initially the interset is almost 90% and
the principal is almost 10% everymonth.

Please let me know your views.

Rgds
Raj

getmore4less

NO.

You pay exacly the same with the new lender if the rate is the same and you keep the end date the same.


The reason the interest is high at the begining is because you owe more money.

JimmyTheWig

The key is that when you remortgage, don't got for another 30 year mortgage. Go for a 28 year mortgage and all will carry along as planned.
I suggest you have another look at your finances and see if you can get the term down to 25 years. It won't mean much more a month but it will make a huge difference overall.

raja_no_1

What if I plan to repay the mortgage entirely at teh end of 10 years...In that case am I paying the lender more in terms of the interest payment? Should I have been better off in taking the term 10 years initially ?

JimmyTheWig

I don't totally understand the question. Can you give more info?

Basically, the more you pay off the mortgage and the sooner you do it, the less total interest you will pay.

dimbo61

Use "whatsthecost" to find out how much you would save in interest by reducing your term from 30 years to 10
Simple
BUT check how much extra you will have to pay each and every month !!!

Gorgeous_George

There are costs involved with switching mortgage providers. These need to be offset by achieving a lower interest rate.

Taking a 10-year mortgage commits you to higher monthly payments in order to pay the mortgage completely by Year 10. If you expect to receive a lump sum in Year 10, a 10 year mortgage is not appropriate. In this case you just need to ensure that there are no penalties involved with early redemption.

You could consider an offset mortgage. This would allow you to save in the attached offset savings account at the same interest rate as your mortgage. Once you have saved a sum equal to the outstanding debt, you can choose to close the mortgage.

GG