Calculating repayment mortgage interest

OnlyMe_08

This may seem a silly question to some, but how do I calculate the monthly capital and interest components on a repayment mortgage?

I'm aware of a couple of tools online where you enter the amount borrowed and interest rate - the results are similar to amounts paid. I'm also aware of the excel function =PMT.

What I don't understand is how much of the monthly repayments is the interest element and how much is capital. Reviewing a couple of annual statements, the interest added to the mortgage account seems high. So, for example, I've borrowed £100K - paid 12 months of £700 = £8400. Interest added to account is say £5000, meaning only £3400 off capital, leaving remaining balance on mortgage is £96,600.

Am I missing something?

maninthestreet

This calculator will tell you:

http://www.drcalculator.com/mortgage/uk/

mdavies1983

Yes this would be correct. As your overall debt from the original loan gets lower, it means you'll be paying more off your capital.

I found a spreadsheet a great help, unfortunately I'm new to the site so I can't paste the link but if you go to Google and type the following words in "learnmoney pdfs Excel-Mortgage-Calculator.xls" it should be the 1st item on the list :-)

Locoblade

My spreadsheet can show you all that

http://forums.moneysavingexpert.com/showthread.html?t=1157173

As others have said your example is entirely normal, in the early years of a mortgage most of the "repayment" actually just covers the interest each month, so you often find you've paid say £10k in a year but reduced the capital by only a couple of grand. As you get nearer the end though, less capital = less interest which means more of your payment each month goes on actually paying off the captial debt.

OnlyMe_08

Thanks to all - I'll have a look at this over the weekend.

I'm not up to speed on the latest mortgage deals, what would be a good deal at the moment?

dimbo61

You can also use "whats the cost " website and put in your details and get full breakdown of your mortgage over 25/30 years depending on term ETC.
" what would be a good deal at the moment" depends on your circumstances and what you want
Interest only , repayment, part IO and part Repay, Endowment, pension mortgage, fixed ,tracker,discount and so on .
You need to post more deatails IF happy with that or go see a whole of market broker.