Silly Question but mortgage clutz!

diddlepops

My 5 yr fixed rate term is due to expire in June 2011. It is currently at 5.29% interest only with Northern Rock. we will automatically revert to the SVR which stands, I believe at 4.79%. I am trying to work out money etc and does this mean that our mortgage payments will come down automatically please? Or does this only happen on a repayment mortgage?

Sorry for the dumb question

reviewbyme

Because the interest rate charged will be different to what you are currently on, then your repayments should automatically be recalculated based on the balance outstanding, over the remaining term on the new rate (whatever the svr may be at the time). You would normally receive a letter from your lender to confirm the new rate and payment around the time your fixed rate ends

diddlepops

So technically, with the interest added on for the last 5 years, I could potentially be paying more a month than less?

loubel

No interest has accrued as you are paying that off each month. With a lower interest rate you will pay less each month. If the SVR goes up so will your payments.

Senior_Paper_Monitor

Your demanded payments will drop (but if the Bank of England base rate rises, or Northern Rock are in a bad mood and put their SVR up anyway or by more than BoE they will go up, and up, and up) - you should make an effort to pay the same as now (and preferably more) in order to start making inroads into the capital