Mortgage repayment

witorwitor

I do apologise if this sounds like a stupid question but I am totally new to mortgages and property market.

If I will take a 100k mortgage for 25 years and let say that my initial monthly repayments will be 700. Does it mean that I will have to pay 700 per month for the next 25 years? Sometimes total costs of two mortgages are the same but initial repayments totally different. Could you explain me why or help me find some websites where I can read about mortgage monthly repayments and how they are affected by changing interest rate?

opinions4u

The first mortgage payment is usually made up of interest for the month the mortgage completes in plus the full payment for the first full month.

e.g. if you borrow £100k at 7% over 25 years then a typical monthly payment would be around £706. I would expect the first monthly payment to be around £998 made up of £706 for the first full month and £292 in interest for the half month remaining after the mortgage funds are released. Subsequent payments would be the £706 a month until the interest rate changes.

Although I know nothing about the company, this site has a very good calculator for helping you identify how much of your monthly payment is interest, how fast (or slow) the debt decreases and what happens should the interest rate change.

smcqis

Yes this is what is means in theory if interest rates stood still for 25 years (depending if your fixed or tracker etc) but what you can do is pay it for 5 years and then re mortgage over 25 years again and your payments will drop further or you can overpay and this will reduce your paymnets and time period

VIGILANT22

witorwitor

You cannot calculate accurately how much you will pay over 25yrs unless you had a fixed rate for 25yrs and never made any changes to your mortgage.
*****
The norm is....

For example if you rcvd a quote for a mortgage term of 25ys, it would read as follows

1. Fixed Rate of 6.89% for 5 years, you would pay

60 payments at a fixed rate of 6.89% £700.00
Followed by 240 payments at a Variable rate, currently 3.99% £551.16

Lenders quote the default/svr rate for when the 5yr scheme ends....this is a variable rate....so altho it may be 3.99% on the day the quote is produced in 5 yrs time this may be 7.99%, which would make your payments just under £800.00. At this point most people would remortgage to find a more competitive rate.

Yr mortgage balance at the end of yr 5 would be in the region of 92k over 20yrs
If you managed to achieve a rate of 2.5% your payments would be around £500.00.

So as stated above unless you have a fixed rate for 25yrs, it is impossible to know how much you will pay over 25yrs.

This link gives access to mortgage/remortgage guides:

http://forums.moneysavingexpert.com/announcement.html?f=15

fredthefirst2

Hi,
I have started making my own mortgage calculator, to help me view of what overpayments is doing to my mortgage.

visualmortgagecalculator.com

You can compare more than one mortgage on the chart. This means you can compare overpaying, with not overpaying. You can also have different interest rates over different time periods, which is something I wanted to see.

Please let me know what you think (I`m still working on it).

Stephen.