Mortgage interest confusion

Newme2014

I'm probably being really thick but could someone explain this to me

Mortgage over 30 yrs 182,350
2years fixed at 5.19%
Then standard 3.99%
Product fee 999.00

So, balance on taking mortgage 183,349
First payment 1288.11 leaving 182,060.89
Overpayment 60.89 leaving 182,000
Interest added yesterday 1089.38:eek:
Direct debit taken but not yet cleared 1001.33
My dd is less than the interest charged, the calculator I used says interest should be about 700-800, am I missing something? Surely if that continued (without the overpayments I plan to make) I'd never repay the mortgage

TrickyDicky101

The initial interest is likely more than a single month equivalent so this situation will not persist in subsequent months. When did you draw down the mortgage and when was the first payment date?

lee111s

Is this your first payment? If so it will probably contain interest for the part of the month between the funds being released and your first payment being taken.

I'm remortgaging to Nationwide today. Normal payment will be £433 however, my first payment on May 1st will be around £620 because I will pay interest ( ~£6 per day) on the funds since they were relased.

Work out your daily interest and then how many days from when the funds were released to the day of your first payment. You can then work out how much interest your first payment will be

Thrugelmir

The initial payment will cover the date from when the purchase was completed. So will more than likely more than a month of interest.

Next month your payment your payment will lower correspondingly so will the interest.

Interest will remain high for some years.

On a 25 year mortgage term you'll still owe around 30-40% of the original advance after 20 years.

You'll pay more back more capital than interest charged after around 15 years.

Hence why the continual suggestion to overpay. As compound interest can work for or against you. Every little bit helps.

Newme2014

Thanks for the replies, I thought it might be interest but was confused as the mortgage started 18th February, paid out £1200 1st March then the £1000 today
Looking back at the account that's the first interest added though so guess it would be
Thanks for putting my mind at rest

Newme2014

Sorry, another probably daft question, how do I work out the daily interest?

I'm hoping to make more overpayments this month as wont be buying carpet or paint, attempting a DIY free 4 weeks

lee111s

You take your annual interest rate, divide it by 365. You then divide that by 100 and then multiply that by your oustanding balance.

I have a mortgage rate of 2.19% and an outstanding balance of £100,000.

So mine is 2.19/365 = 0.006
0.006/100 = 0.00006
0.00006 x 100,000 = £6 per day.

lee111s

With £180k left outstanding, at 5.19% your daily interest is £25.87 give or take a few pence.

Quite eye watering when you work it out! Which is why overpaying, especially in the early days is the best way to reduce your mortgage term as all overpayments come off the capital, thus not only reducing the amount you owe, but also reducing the daily interest you pay.

Newme2014

Lee111s, that's awesome, thank you, my standard o/p will be £200pm as my dad is paying back a loan so although it's my money it's not my wages so it's 'extra' money, if that makes sense. I'm HOPING for around £300 on top of that for months I'm not doing anything to the flat.
Think I might try and work out what I need to pay to be in different LTV brackets by the time my fix runs out on the basis of my flat staying the same value so I've got goals to aim for (staying within the o/p limits, saving any extra)