Making overpayments but the balance aint going down - HELP

singhini

Dear forum members


Like anumber of other people on here, I too am desperate to pay my mortgage off. However I have noticed that my overpayments don't seem to be brining the mortgage balance down by the corresponding amount each month (so you help in understanding this is much appreciated).


Keeping it simple, my monthly mortgage payment is £400 which I pay, however I also overpay £1,100


I cant seem to work out why my mortgage balance is going down by £1,475 (and not by the full £1,500)


Surely if im required to pay £400 each month, then the extra £1,100 should be having its full effect


I did think that its due to the interest rate (which is 2.49%), being charged by the mortgage company on a daily basis. However the fact the regular mortgage payment is set at £400 by them would already take into account the interest rate.


I have 15 years left of paying £400 each month and so thought that making overpayments of £1,100 would mean £1,100 physically coming off the monthly balance


your ehlp in understanding this is much appreciated.

hcb42

My statement shows the amount of interest that gets charged every month. I expect yours will do the same.

hostie

I think some mortgages are set up so that you pay all the interest off before the capital (I could be totally wrong, someone will no doubt correct me if I am). I think I may have this type of mortgage, which means you pay a LOT of interest over many years before you start chipping away with capital payments.

Alchemilla

If you are on a repayment mortgage then part of the monthly payment is interest and part is capital.

The longer you pay for, the greater the proportion is capital and the smaller the proportion is interest.

Even in the last of your fifteen years, you will pay some interest out of your payment, but it won't be very much.