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Fixed rate and overpayments
Comments
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Ok, maybe I stand corrected.
I was under the impression that an overpayment to an interest only part of a loan only served to increase the amount of interest you actually pay off and didn't effect the capital.0 -
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Sorry Zenshi I could have been more helpful to you.
The interest only part of my mortgage is £136k. The monthly payment is £616.
I make an additional overpayment of £1000 into this part of the mortgage.
After month 2 I only owe £135k, so there's less interest due and my monthly payment should change to (theoretical made up number) £611. But my actual payment stays the same, so I'm now making an automatic overpayment of £5 every month.
I pay off another £1000 this month, my payment should drop to £606, but is actually fixed so I'm overpaying by £10.
Hope that helps.0 -
I think I need to get my mortgage account online, then I can check the balances each month
Never made an overpayment on a mortgage and have had one donkeys years. Should have been paid off a few years ago but with the endowment fiasco, then a divorce and then an extension...it's still rolling! One day.....LBM.....sometime in 2013 £27,056. 10 creditors
June 20.....£7,587.....3 creditors left 72% paid
£26,200 on interest only part of mortgage (July 16)...will chip away £17,103
£49,200 repayment mortgage ( July 16) £37,7640 -
Sorry Zenshi I could have been more helpful to you.
I pay off another £1000 this month, my payment should drop to £606, but is actually fixed so I'm overpaying by £10.
Hope that helps.
So, you're on fixed rate.....so this overpay of £10 in your monthly standard payment, then goes where? Off the interest only capital too?!LBM.....sometime in 2013 £27,056. 10 creditors
June 20.....£7,587.....3 creditors left 72% paid
£26,200 on interest only part of mortgage (July 16)...will chip away £17,103
£49,200 repayment mortgage ( July 16) £37,7640 -
Hands up. It appears overpayments on an interest only mortgage do come straight of the capital. I think the heats fried my brain also. Sorry for the confusion caused.0
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So, you're on fixed rate.....so this overpay of £10 in your monthly standard payment, then goes where? Off the interest only capital too?!
Exactly that Zenshi. With my mortgage it's almost exactly £5, per month per £1000 overpaid. So because I keep my monthly payments the same I get
Mth1 - £1000 overpayment. Balance £135,000
Mth2 - £1005. Balance £133,995
Mth3 - £1010. Balance £132,985
It's like compound interest on your savings in reverse.0
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