Can someone please have a look at this?

*doodle*_2

In July 2007 I took out a 30 year Capital Repayment Mortgage with Nationwide. I borrowed £75,000 and the interest was/is 5.48%. It is a five year fixed rate which comes to an end July 2012. I took this out with an estate agent who has an advisor. The house that I bought was not on their books.

I am repaying £427.73 every month and have never missed a payment.

My next statement is due in December but, according to my December 2010 statement I owe £71,750.26. My credit report shows this amount, too.

It has suddenly struck me, that over the course of four years I have paid just over £20.5k but only lowered my mortgage by just over £3K. Surely this can't be right, can it?

My opening balance on 01.01.10 was £72,918.78 and the closing balance on 31.12.10 was £71,750.26. This means that I am paying off a grand a year.

This can't be right. Has anyone got any advice? Obviously, when the fixed rate comes to an end I will be, I hope, moving it elsewhere.

Many thanks in advance.

Leon_W

It sounds about right to me.

This is a 30 year term so there is going to be a lot of interest. In the early years of a mortgage most of the payment is just the interest with a little coming off the capital. As time goes on you pay less interest because you owe less, therefore much of your monthly payment goes towards repaying capital and not interest.

There are plenty of calculators all over the internet so try one of those to confirm.

*doodle*_2

Leon_W wrote: »

It sounds about right to me.

This is a 30 year term so there is going to be a lot of interest. In the early years of a mortgage most of the payment is just the interest with a little coming off the capital. As time goes on you pay less interest because you owe less, therefore much of your monthly payment goes towards repaying capital and not interest.

There are plenty of calculators all over the internet so try one of those to confirm.

So, next summer, if I get a 25 year mortgage I should be in a better position?

Sorry if I sound a bit thick but money information tends to go in one ear and out of the other.

kingstreet

Here's an example;-

Balance at beginning of year for 30 year mortgage;-

1 - £75,000
2 - £73,988
3 - £72,919
4 - £71,827
5 - £70,753
6 - £69,612
7 - £67,109.

The shorter the term, the higher the payment and the more capital you repay.

GMS

Have a look at the website below

http://www.mortgages-loans-uk.co.uk/information/mortgage-amortisation-calculator.htm

Put the numbers in and have a look at the results. Remember to add any fees which were added to the mortgage such as arrangement fees.

Once you have the figures you will get an idea of what is paid off each month from the capital.

Basic rule of thumb is in the early days it is almost all interest. The last payment will be pretty much all capital. As you chip away at the capital balance the interest will be less and less and the capital more and more.

If you start a new 25 year mortgage the principle will be the same in that early on it will be mostly interest.