Paid £65K into 5 year fixed rate – but mortgage only gone down by £10K!!!

frugalista_2

It does seem that there is something amiss here.

Assuming a 25 year repayment mortgage with a 5.79% fix, at the end of the 5th year the principle balance should be £154,212.72, not 163k.

However, if the poster has got a 35 year mortgage, the balance would be £163,208.37. This could explain it.

On the other hand, on a 25 year mortgage the total payments over 5 years are about £65k as the poster reported, whereas over 35 years they would be about £57k

Other possible explanations for the discrepancy are:

• Borrower changed the term of the mortgage
• Mortgage company added charges into the loan (so it was bigger than 172k)
• Borrower has "withdrawn equity", i.e. taken out a bigger mortgage during the 5 years
• Borrower has had payment holidays
• Borrower has switched to an interest-only mortgage for part of the period

Here's the mortgage calculator I used:
http://www.bloomberg.com/invest/calculators/mortgage.html

frugalista

kingkano

They could also have a part & part?

lonely_2

Actually, I did take a repayment holiday of 6 months back in from Jun to Dec 06 - would this make the figures right?

The mortgage is 25 years and nothing else has been added.

lonely_2

kingkano wrote: »

They could also have a part & part?

what's that?

Noz

lonely wrote: »

what's that?

Part repayment and part interest-only mortgage

PosterBoy77

Why do people refer to "repaying interest"? Interest is never repaid, it carries on indefinitely. All you can ever do is repay capital to reduce the amount of interest that is charged, on the remaining sum of capital that is borrowed.

As this thread demonstrates, overpaying as much as possible (if your mortgage product allows you to) during the early years of a mortgage is the best way of reducing the total amount of interest that will be paid during the life of a mortgage.

wisbech_lad

If you took a six month payment holiday, yes, sounds about right. Remember, that while you are not paying, interest is rolling up, and compounding...

Tootsie_Roll

Al_Mac wrote: »

What would you suggest as an alternative

It's one of the principle reasons endowments were so popular. I took out a unit linked endowment policy against all the advice given to me at the time and not received a single warning letter !