Where are all the monthly payments going?!

angelicmandy

Hi all, this is probably a really stupid question but im confused. My partnern and I bought our house in 2005 and were very lucky to have a large deposit with much help from our respective parents so only had to borrow around £76k on our mortgage.

Five years on we are currently on a variable mortgage deal after our fixed term came to an end. However, according to our mortgage statement we still owe around £70 on the mortgage. Am i being really stupid but surely we should have paid off more than just £6k since 2005. My partner thinks its because we took the mortgage out over 25 years obviously the final total sum payable is well over £70K by the time you add interest on but I still cant get my head round it.

Would I be able to request a redemption statement from our lender. We are coming into quite a large inheritance and would be thinking of paying a lot of the mortgage off so would need to know what we owe & where we stand on the figures.

btw, we are paying the debt plus interest each month

thanks for any help/guidance :A

vicky79

Unfortunately the monthly payments go towards more interest than 'debt' at the start - if you have a look at a calculator like this - it should show you where the money is going.
http : //www. calculator. net/mortgage -calculator -uk. html (just remove spaces - i can't post links yet!)

Did your lender send you any info when your fixed rate finished? They should tell you the terms and conditions of the variable rate (eg of you can overpay and if there are limits on this etc)but if not I would have thought if you ring them they could give you the information you want.
(I am sure that a list of costs is usually printed on the back of my annual mortgage statement so your lender may do the same if you have a look)

There are mortgage overpayment calculators available too; you can then see how much the overpayment will reduce your loan term - a good incentive to overpay if you can.
Good luck!

Joe_Bloggs

@angelicmandy
MSE Martin has a mortgage calculator page here. I Do not think that your figures are far out. It would have been helpful to quote the interest rate and repayment amount as this data can complete the picture as to where you should be.

I am given a redemption statement as a year end summary by my lender. I would have hoped that everyone got one. Circumstances change, deals end, there is no excuse for a lender not to issue one.

I was once given a brush off when the call person said that they only gave those details to solicitors. I had to plead that I had a right to know since it was my decision whether to try to re-mortgage or not.
J_B.

TrickyDicky

If you borrowed £76k in 2005, and have 70k left, are you on something like 7.5% at fixed rate?

firstaspect

Most of the monthly payments go towards the interest. I would have expected that you receive a monthly mortgage statement stating how much you have paid, how much the interest is and what is left on the mortgage.

luckyfool

firstaspect wrote: »

Most of the monthly payments go towards the interest. I would have expected that you receive a monthly mortgage statement stating how much you have paid, how much the interest is and what is left on the mortgage.

Few lenders will provide a "monthly" statements, apart from maybe offset current account lenders. Typically its annually, or rarely quarterly.

In the early years of a 25 yr mortgage only a tiny proportion of the repayment is actually paying off capital, the vast majority is only interest. Hence the benefits of either reducing the term, or making overpayments monthly or by lump sums which can dramatically reduce the interest you end up paying.

firstaspect

luckyfool wrote: »

Few lenders will provide a "monthly" statements, apart from maybe offset current account lenders. Typically its annually, or rarely quarterly.

Really? I've always had a monthly statement about my mortgage.

Barny1979

Mine is quarterly from Northern Rock.

angelicmandy

Many thanks for all the replies. I will have a good look at the paperwork from the lender. We are currently on a variable rate of under 3% if I remenber rightly and are paying around £360 per month at the moment.

Previously, we had been on fixed term mortgages although I cant remember the exact rates or payments wihout checking the paperwork. I dont think at any point we had t:Ao pay too much over £500.

FATBALLZ

You can only expect to pay off about 10% of your balance in the first 5 years on a typical 25 year repayment mortgage, all the rest is just interest going to the bank. I've actually been better off renting for the last 5 years than if I'd bought.

angelicmandy

based on all the above, would it still be a good idea for us to pay off all or part of our mortgage if we are able to ?

im guessing its a no brainer in one sense as obviously we would be saving that amount every month wouldnt we.

Am I right in assuming if we ask for a redemption statement the figure the lender comes back with is the final amount we need to pay to them to clear it all off. (im guessing they will have an early repayment fee even though we are now on variable rather than fixed rate term?)

:A