Interest only lump sum payments and reduced repayment

MikeBeirne

Can anyone explain how this works in simple terms please.
Interest only mortgage which is fixed, figures below are rounded
Mortgage £60000 repayment £266 pm
I paid a lump some of 20% (£12000) off the capital which was all without penalty
Now mortgage £48000 repayments £213 pm
Twelve months later paid another £12000 off the capital (10% interest free plus the rest with interest)
Now mortgage £36000 repayments £185
So my question is for example the last lump sum payment is 25% of the remaining capital so why does my monthly repayment not reduce by 25% as well? Is there a simple answer?
Should I have not paid the lump sums and kept the money in the bank until the mortgage end in a couple of years?
Cheers in advance for any comments Mike

TrickyDicky101

I agree that on an interest-only basis you would expect proportionate reductions in interest charged for capital repaid (all other things remaining equal).

Hence, are you sure no charges have been applied?
Have you received confirmation of your outstanding balances with each repayment of capital you have made?
Have you asked the lender?

kingstreet

If you use the first calculation to calculate the rate, it's 5.32% pa.

Then, on £48,000, the monthly payment at 5.32% is £212.80. Which appears consistent.

Finally, on £36,000, interest at 5.32% is £159.60 not £185 so something has changed. Either the balance is more than £36,000 or the rate has increased.

MikeBeirne

Thank you for your comments, I will contact the lender and see what is going on. I will post their comments also
Cheers and thanks again
Mike

MikeBeirne

Thinking about it, it might be that I have made the lump sum payment partway through the month so the full effect doesn't happen until next months payment. So this months payment may be half based on £48000 and the other half on £36000
Cheers Mike

MikeBeirne

Yes, because I paid the lump sum midway between usual standing order dates the interest is also split. Next months payment is around £160 which is what I expected as the new monthly payment.

Cheers Mike :j