Part interest/part repayment

kerjak1

Hi,

New here and hope I'm posting in correct place, Was looking for some opinions/advice on a general mortgage query please,

A few years ago changed my interest only mortgage to part and part as endowments not performing although most of it was left as ineterest only.

Also, started overpaying mortgage when interest level dropped. Received annual statement recently and have been advised I have now cleared the repayment part of my mortgage and that what is left is interest only.

Now, it's not that I don't trust banks:rotfl:, but are they allowed to do this?

I thought the repayment and interest parts of mortgage would reduce simultaneously for remainder of mortgage i.e. still got another 10 years to go.

Or am I being suspicious:cool:?

Any take on this would be appreciated.

TrickyDicky101

Presumably the overpayments were applied to the repayment mortgage sub-account hence clearing the balance quicker.

There is no issue in doing this (at all) unless you directed otherwise and the interest only element carries a higher rate of interest.

amnblog

Why would the lender be reducing an element you requested to have as interest only?

kerjak1

Thanks for replies. At the time I asked for part and part I assumed a pecentage of my payment would go to each part of the mortgage(maybe incorrectly) i.e. a bit to repayment and a bit to repay the interest only.

I then started overpaying and assumed that overpayment would be "split" the same.

I'm not sure if the repayment part interest is higher or lower than my interest only part. That is my concern. Are they punting all the monies I have paid into the "lower" interest repayment part of mortgage? In effect costing me more in the long run when some of it could have been put into higher interest interest only part.

amnblog I see your point though. Although now as repayment part has now been paid all monies will go toward interest only part in effect lowering balance.

Hope this make sense as I'm beginning to confuse myself.

I think I might be being overlay suspicious, but it is a Bank, after all.

Thrugelmir

kerjak1 wrote: »

I think I might be being overlay suspicious, but it is a Bank, after all.

Think that you are making matters overly complex. Rejoice in the fact that you making inroads into your mortgage.

kerjak1

Thanks for replies. Appreciate it.