Mortgage interest

tinah

Can anyone explain to me why my mortgage interest this month is higher than last month despite paying my usual repayment of 310.89 on the 1st of May plus 300.00 overpayment paid on the 5th May. The mortgage is with Halifax and is a fixed rate for two years. I thought if you paid money off the amount of interest charged the next month would go down? It's only about 2 pounds more than last months interest but it would be better in my pocket than there's.

TrickyDicky101

It will depend on the number of days in the period too - these are likely to change month on month depending on when the payment date falls.

libf

Overpaying will either reduce your monthly payments or decrease the term. Looks like your mortgage will be reduced in term because of your over-payments rather than the interest being reduced.

tinah

Thanks both will see what next months interest is.

Trying_to_be_good

The reduction in the monthly payment option would be because the capital repayment element would be reduced. The interest due should reduce in either a reduction in length of term or reduction in monthly payment.

The number of days on which the interest is charged is likely to be the difference, so long as the interest is calculated daily (which is the case with most modern mortgages).

Keep an eye next month and check that the interest is reducing overall!

getmore4less

With so little detail people can only guess.

Most mortgages the payments are set to be the same but the date they get paid varies and the number of days changes so the real interest varies.

£300 overpayment will have a tiny impact on the interest.

Thrugelmir

tinah wrote: »

I thought if you paid money off the amount of interest charged the next month would go down?

There's 30 days in April and 31 days in May. So the interest charged will be be increased for the additional day. Although your balance has reduced.

Likewise in June you'll see a fall with a rise in July again.

pvt

Thrugelmir wrote: »

There's 30 days in April and 31 days in May. So the interest charged will be be increased for the additional day.

tinah wrote: »

It's only about 2 pounds more than last months interest

If the normal payment was £310, and this change is because of the number of days in a month, then it would be over £10 more, not just a couple of quid.

It may depend on the lender, but, my understanding was that mortgage terms or repayment rates were only recalculated if you overpay a significant sum, like £1,000 or £5,000 minimum.

getmore4less

pvt wrote: »

If the normal payment was £310, and this change is because of the number of days in a month, then it would be over £10 more, not just a couple of quid.

Not if it I repayment.

Thrugelmir

pvt wrote: »

If the normal payment was £310, and this change is because of the number of days in a month, then it would be over £10 more, not just a couple of quid.

The £310 includes capital not just interest. The capital balance has been reduced . We don't know what the balanced owed is nor the interest rate. To determine a precise figure.