Where are all the monthly payments going?!

angelicmandy

ps martin's mortgage calculator page v helpful - thanks.

ixwood

Yep, it's because you took the mortgage out over 25 years. You should have chosen a smaller term, or overpaid if you could afford it.

Just be grateful you didn't take it out over 35 years, or go Interest only like some people do.

techno12

Yeah it's funny how these things work, but www.jeacle.ie completely showed me how. Play with the sliders and watch the figures/graph change.

When you think about it, it's like tipping scales where each month you're paying off a bit of what you owe (plus all that interest). The next month as you owe less you end up paying a bit less interest and a bit more off the remaining capital, so the scales tip a bit more in your favour...eventually you'll hit the bottom and have paid everything off.

After my first 2 years (06 to 08) I was shocked to see I'd only paid off about 4k from my 148k mortgage as it was a 29 year term and hence I was at the top of the scales analogy above. Luckily I'm now on a 1% tracker so it's reversed and I'm paying 4x more off the capital than I am in interest. Long may it last ;-)

Jackinbox99

I had exactly the same thing when I first got a mortgage. I checked and whilst I was paying something like £500 a month, only £100 of that was actually coming of the mortgage amount. So, over a year thats only £1200 off a mortgage!!!!

I soon decided to start overpaying, and from then on overpayed £500 a month on top of what I was paying, which meant I was paying £600 a month off my mortgage. Then, after a few years when I remortgages, I dropped the term from 25 years down to 10 years. Which again, made it so I was paying more off quicker.

Now my yearly statement makes much better reading!

Person_one

ixwood wrote: »

Yep, it's because you took the mortgage out over 25 years. You should have chosen a smaller term, or overpaid if you could afford it.

Just be grateful you didn't take it out over 35 years, or go Interest only like some people do.

I've taken mine over 35 years, its the only way I can really afford to put a roof over my head right now.

There's nothing wrong with taking out a long term initially, it doesn't need to have that much bearing on when you actually pay off the mortgage and can be a good temporary measure.