mortgage calculation confusion

puddy

We currently have a million year fixed rate with sharkleys at 4.89% with 10.5 years left on the mortgage and 5 years left on the fixed rate.

I think our last statement had about 54k on it and we pay £560 per month

Today I saw a fixed rate offer by the Yorkshire building society at 2.99%, so I put in rough figures of repayment mortgage, over 10 years of 60k (as we have to pay a redemption penalty but im not sure how much) and the payment came out at 587 per month??

How can this be, when the rate is nearly half of what we're paying n0ow?

I then put 54k as the remortgage amount and it still comes up with a figure of 520 a month, savings us only 40quid a month, even if we had no redemption penalty to pay off

Am I missing something, I thought the payment figure would be much lower than this if we remortgaged at such a rate?

surreysaver

You are still paying off the capital - that will not decrease - in fact, the amount of capital you pay off will increase if the interest rate goes down.

kingstreet

As you approach the latter part of a mortgage term, more capital and less interest is being paid. The rate becomes less important at that time.

puddy

oh, ok, thank you

how come our mortgage only goes down by about 2k a year then, i think last years (2011) statement had about 56k owing and then i was doing some filing the other day and found octobers statement from 2012 had about 54?

i was wondering how we're going to pay off 54 in 10 years at 2k a year? i hope they're not getting it wrong

GMS

Put your figures into this http://www.calculator.net/mortgage-calculator-uk.html

TrickyDicky101

You're not - you can work it out in ball park terms.

At the moment, the interest you suffer on the mortgage will be less than

4.89% * 54,000 = 2,640

You are paying 560 a month which means annual amounts of 6,720.

Hence, this year you will pay off in excess of £4,000 capital (6720 less 2640).

The capital component will increase as the term decreases.

puddy

ok, so theres no point moving onto a nother mortgage then really is there?

i think i must have misread the statements then, im sure 2011 said that we had 56k owing and then the one in october 2012 definitely said 54k?

Let_Us_See

Why not simply check your annual mortgage statement? Most statements not only confirm monthly payment and balance, but also a breakdown of the amount of interest and capital repaid.

Zero_Sum

Have a play around of my spreadsheet
http://zerosum.host56.com/