Capital paid off in first two years of mortgage

ffor99

Hello,

I have been approved a mortgage of £112,500 with a LTV ratio of 69% (£51,500 deposit).

I have worked out that when the 2 year fixed term ends, in order for me to qualify for the 40% LTV rates, I will need to have equity greater than or equal to £65,400.

Please could someone give me a rough idea as to how much capital I would have paid off in the first two years so that I know how much I would need to top up to achieve the 40%?

I am currently on an interest rate of 2.99% £530 monthly payments (25 year mortgage).

Many thanks in advance,

ValHaller

The tool you need to do the calcs is an amortisation schedule calculator. Plenty on the internet.

monty-doggy

http://www.moneysavingexpert.com/mortgages/mortgage-deposit-calculator

Use this calculator, should be able to play with it to see the different scenarios?

CKhalvashi

Have a play with this and this.

I haven't, but you may be surprised at how much you'll save.

CK

ffor99

Thanks to both of you. I will try this calculator now!

Thrugelmir

Having a 60% LTV does not qualify you to obtain a particular rate. Also depends on the lender and their target market for the product.

Hence why product fees tend to be high so to discourage borrowers that wish to obtain small mortgages.

ACG

Have you had a look on the back page of your KFI document (the document that is around 6 pages) it has all the details off your mortgage but the back page has a table with how much you will have paid off the balance etc.

ffor99

Hi,

I am purely going on what my current lender is offering at the moment. For a 60% LTV the rate drops to 2.69% which could potentially drop the mortgage payment to around £460 per month. So well worth considering.

Completely understand that in two years time anything can happen and rates may start to go up but surely you're in a much more beneficial position with a higher LTV ratio?

I have checked the calculator and surprised that the capital repayment is much less than I thought. I don't really understand the logic behind why you pay more interest off in the early years but guess there must be a reason!

ffor99

Hi ACG,

yes have had a look at the Key Facts but there was no table as such. It just deals what your monthly repayments will be going forward and how much interest will be paid over the term.

kingstreet

Broker sourcing systems routinely produce a KFI with a repayment schedule at the end. Trigold provides it as part of the KFI, Mortgage Brain as a separate sheet but lender KFIs don't include it.

ViolaLass

ffor99 wrote: »

I have checked the calculator and surprised that the capital repayment is much less than I thought. I don't really understand the logic behind why you pay more interest off in the early years but guess there must be a reason!

Interest is worked out as a percentage of the amount owed. Earlier on, you owe more therefore you pay more interest. Later on, you owe less so you pay less interest.