Mortgage Interest Rate Query

kl1ng0n5

Hi - I'm hoping someone can help explain mortgage rates to me.

Here's my current mortgage details:-
House Value: £145,000
Mortgage: £48,000
Rate: 2.5% with Nationwide (variable rate)
Monthly repayment: £392

I initially had a fixed rate years ago which then reverted to Nationwide's variable rate giving us a rate of 2.5%. I'm considering a fixed rate for a 10 year period and have been surprised by the repayments quoted. One of Nationwide's quotations for a 10 year fixed rate (with the same 13 years term remaining) gave a fixed rate of 3.04% with a monthly repayment of £372.87! This is £20 less than I pay at present and this is a higher rate!

Can anyone help explain why a higher interest rate over the same term can give a lower monthly repayment?

Just to clarify:-
Currently an interest rate of 2.5% - monthly repayment £392.
Quotation for interest rate of 3.04% - monthly payment £372.87.

Thanks in advance.

Thrugelmir

Have you got the term right. Not just years but months?

kl1ng0n5

Hi. As at my statement date of January 2015, I have 13yrs 4 months left in my current mortgage. When using Nationwide calculator I just put in 13 years as there's not an option to put in 12 years 9 months.

Also just double checked current monthly payment - it's £394.81 not £392.

Would this make a difference?

Thrugelmir

kl1ng0n5 wrote: »

Would this make a difference?

Yes. So would the precise balance.

As you are both understating and overstating the monthly repayment figures when making a comparison.

Suggest you obtain a quote based on your actual mortgage balance over the remaining term.

kl1ng0n5

Thanks for advice. I'll call them tomorrow to request statement/quotation. Hopefully that'll clarify things.