Bit confused... is this normal?

BlueDaisy

Hi All,
Looking for a bit of advice/comments
I have only recently started to pay attention to my mortgages as I want to get them paid off soonest.
I have a BTL mortgage which has £22173 remaining. When it started it was on a fixed rate, when this ended we went to the SVR for that bank, RBS, currently at 4%. I have been overpaying this regularly for a few years. I only get one statement a year for this account and was looking at old statements, when I noticed that they always break down my monthly payment the same way... Minimum payment = £186, voluntary overpayment = £34, interest = currently £73ish.
The minimum payment has not changed since May 2009, and therefore my overpayment has not changed either. But the interest taken off does decrease by a small fraction each month.
I phoned them to ask about this as I though that the minimum payment would change, if not on a monthly basis then at least on a yearly one. She said that when the interest rate changes they work out the capital you still owe and 'divide' by the remaining term (in 2009 that was 19 years) and set the minimum payment that way. The monthly minimum payment therefore won't change until the rate changes.
When I asked how long I still had to pay, she said 'If I continue to pay £250 per month (I have just increased the OP) then the mortgage would finish in 'about 9 years'.
Now I don't think they are 'fiddling' me (the interest is decreasing and the capital is decreasing) but it all just seemed a bit odd, and the young girl on the end of the phone did not instill any confidence in me at all, she was extremely vague.
Do you think I should be worried??

Imma_Number

To clarify: You were paying £220 pcm (ie 186+34)?
Certainly the interest portion for £22173 @ 4% for the 1st month would be £73ish.
And if you pay £250 pcm then it will be paid off in just under 9 years (assuming interest rates don't change)

A repayment mortgage for £29670 over 19y @ 4% would have a monthly payment of £186 which is I'm guessing about what you owed in May 2009.

IIRC if the bank changes the amount it collects via DD it has to write to you first and allow 14 days before they take the money. If the payment stays the same they don't have to write.

I'd not be worried.

BlueDaisy

Thanks so much for replying. That has certainly put my mind at rest. It was kind of what I thought but nice to have someone knowledgeable to clarify

StuC75

I think the 'Young Girl' had it spot on.

You have been making overpayments to bring down the term of the mortgage, and so the minimum payments should remain the same (The payments would only come down if you wanted to keep to the original term)..

because your overpayment is £34 per month then it is bringing down the term (overall), but is less than months payment so wouldn't trigger such a recalculation...