Confused

ravenk

I have a £86,000 interest only mortgage.
I moved this to a tracker deal back in Feb 2008 on a 5 year deal.
Thus my interest rate is currently 1% (Base plus 1/2% deal).
One of my endowments paid out and I went into the building society branch to pay £43,000 off the sum owed.
The girl at the counter took my account number and asked if I wanted to pay off the capital or reduce the term ?
I said pay of the capital ....
How could I have reduced the term ?
Confused ....

Mortgage rate when tracker deals ends (4th of Feb 2012) will increase to 4.56% :-(
However not too concerned , I have another endowment that matures in March (21st) that will pay off the other £43,000 ...

System

Sounds like the girl at the counter presumed it was a capital repayment mortgage

kidmugsy

ravenk wrote: »

I moved this to a tracker deal back in Feb 2008 on a 5 year deal.
Thus my interest rate is currently 1% (Base plus 1/2% deal).

Roars of applause!!!!!

Jimbo1976

With an interest only mortgage it doesn't make a difference. Your payments will fall as you owe less but the term doesn't change.

If you had a repayment mortgage then there would be an impact depending on which you chose. If you pay off the capital then they would recalculate your payment to work out your new payment keeping the term the same. If you chose to keep the term the same then your payment wouldn't fall but you would be paying it off much quicker.

Were there any early repayment charges for your mortgage?