Interest only mortagage - interest more than repayments

gurnardnipper

My understanding of an interest only mortgage was that any interest was negated by your repayments - ie amount owed never changes unless you pay more than your interest only repayments.

So my question is - Is it correct that my total owed from last year has actually increased - even though all interest only repayments have been made in full.

total owed originally £23000 - total owed a year later after full payments of interest only mortgage £23056.

Is this correct? or should i complain - in my world i would have imagined that interest only repayments do just as they say on the tin - re pay any and all interest on the amount owed.

Any clarification - then please reply

Thanks in advance

blueberrypie

Was the figure of £23,056 obtained exactly a year after the funds were released from the lender?

Are there any fees involved? (Either added at the time the mortgage was taken out or, if this is a redemption figure, fees which are added at the end of the mortgage, or early repayment charges?)

diable

At what time was the figure requested, most interest only mortgages used to have an endowment policy tied to them.

gurnardnipper

Thanks for replying

The figures i posted were just examples - the actual gain in mortgage equated to less than 0.01% - There are no fee's of any kind included - mortgage still has 20 yrs to run and i do not beleive that an endowment policy has been tied. The only thing that has happened to this mortgage ( except for repayments below the redemption figure) is that it has come out of a fixed % period and is now on a tracker - but still i was in the belief that the repayments reflected exactly the amount of interest.

Thanks again

diable

If you only have a 23k mortgage that is interest only is that you need to ask for the total amount owed as the interest is only on the loan.

Gorgeous_George

Your interest may be calculated daily and the difference could be the fact that your statement is produced on a particular day of the week.

If in doubt, ask the lender.

GG

GMS

Could it be an admin fee for having your buildings insurance away from the lender?

If this is the case the fee would be added every 12 months.