HELP -Norther Rock 125% Mortgage

lucylou1985

Hi need some advice please.

My partner bought his house 10 years ago with his ex on a 35 yr 105% mortgage from Northern Rock. They split up 4 in and thats it just getting sorted out. The house is in negative equity so am unable to sell.

The house was bought for 53k plus 5% = 55650. he got a redemption letter saying to pay off mortgage he owes 51k. This makes no sense to me as how come in 10years hes only payed 5k off mortgage and so the next 25yrs he would be expected to pay off the remaining 51k? My partner says its right - you pay off the interest first which i never heard of. I would have thought that 10 years in he would owe in region of 40k.

Any mortgage experts out there ?

davidmcn

Can't comment on the specific figures but yes in general that's how it works - as you go through the mortgage term, an increasing proportion of the monthly payment is repayment of the principal, so the balance will drop off much faster towards the end.

Caz3121

lucylou1985 wrote: »

The house was bought for 53k plus 5% = 55650. he got a redemption letter saying to pay off mortgage he owes 51k. This makes no sense to me as how come in 10years hes only payed 5k off mortgage and so the next 25yrs he would be expected to pay off the remaining 51k? My partner says its right - you pay off the interest first which i never heard of. I would have thought that 10 years in he would owe in region of 40k.

Interest is payable on the outstanding amount
assuming 4% interest rate - £246.40 per month payment

in month 1 that will be £185.50 interest and £60.90 off the balance
in month 60 there will be £51,612 remaining and the mortgage payment will be £172 interest and £74 off the balance
by the final month the interest is under £1 and the rest goes to the balance

have a look at guardian loan calculator and it will give a view on how interest is calculated over the term