Mortgage not decreasing much? why?

gasman786

Hi all

Im new to this forum and was hoping for some advice on my mortgage balance which hardly seems to be reducing.

I took out my mortgage in nov 2006 with Northern rock. This was eventually moved to NRAM and now its with Landmark mortgages.

The house back then was priced at £110'000.
I took out a mortgage off £85'000 at 4.5%.
Ive paid £470 approx for the past 12 years never missing a payment.

However on my latest mortgage statement it says my remaining balance is £71'000 approx! I know in the first few years ur paying mainly the interest but surely my balance cannot be right??!

Ive been to a mortgage advisor and even he says this does not look right, and as the mortgage was with nram and then landmark its possible something unwholesome is going on.

Could anyone please advise?

gasman786

Just to add, ive made 144 payments of approx £470 over 12 years.

The mortgage is a 30 year mortgage.

So ive paid them approx £68'000 over this time yet my mortgage has only reduced by £15'000? Surely thats not right??

Thrugelmir

gasman786 wrote: »

However on my latest mortgage statement it says my remaining balance is £71'000 approx! I know in the first few years ur paying mainly the interest but surely my balance cannot be right??!

Depends when you switched onto a repayment basis and the term of the mortgage. In the early early months/years little capital is repaid every month. This does come to a shock to a lot of people.

As an illustration a £71k mortgage repayable over 20 years would incur nearly £37,000 of interest at a 4.5% rate.

Lotak

gasman786 wrote: »

Hi all

Im new to this forum and was hoping for some advice on my mortgage balance which hardly seems to be reducing.

I took out my mortgage in nov 2006 with Northern rock. This was eventually moved to NRAM and now its with Landmark mortgages.

The house back then was priced at £110'000.
I took out a mortgage off £85'000 at 4.5%.
Ive paid £470 approx for the past 12 years never missing a payment.

However on my latest mortgage statement it says my remaining balance is £71'000 approx! I know in the first few years ur paying mainly the interest but surely my balance cannot be right??!

Ive been to a mortgage advisor and even he says this does not look right, and as the mortgage was with nram and then landmark its possible something unwholesome is going on.

Could anyone please advise?

Using:
4.5% rate
360 months
£85,000

You should be paying £430.68 / month and the balance after 12 years should be £63,679.85. You will have paid £40,698.14 in interest.

Either you've taken out some sort of PPI which has increased payments by £40 / month, or your rate has been variable.

TrickyDicky101

gasman786 wrote: »

Just to add, ive made 144 payments of approx £470 over 12 years.

The mortgage is a 30 year mortgage.

So ive paid them approx £68'000 over this time yet my mortgage has only reduced by £15'000? Surely thats not right??

A £470 payment over 30 years on an £85k principal implies an interest rate (at least at the start) of c. 5.3% and not 4.5%.

Have you got the numbers wrong?

Thrugelmir

Lotak wrote: »

Using:
4.5% rate
360 months
£85,000

You should be paying £430.68 / month and the balance after 12 years should be £63,679.85. You will have paid £40,698.14 in interest.

Either you've taken out some sort of PPI which has increased payments by £40 / month, or your rate has been variable.

Mortgage was interest only at the outset.Not on a repayment basis.

getmore4less

Thrugelmir wrote: »

Mortgage was interest only at the outset.Not on a repayment basis.

OP does not say that.

Get the paperwork out
Post the annual ballance, rate interest, paid on each statement

gasman786

Just going through paperwork i was on a 3 year fixed at the start and the rate was 5.5%.

After the three years I was moved onto the variable rate of 4.5%

gasman786

Mortgage is repayment. Not interest only

Thrugelmir

gasman786 wrote: »

Just going through paperwork i was on a 3 year fixed at the start and the rate was 5.5%.

After the three years I was moved onto the variable rate of 4.5%

What's the term of the mortgage?

Was any fee added to the mortgage for the fixed term product at the outset?

dunstonh

You dont really start paying much off the mortgage until the term gets to under 20 years. 25 year mortgages were not picked by random. It was seen as the longest term that matched affordability and a decent rate of repayment. Even then, the first 5 years would have little paid off.

You went longer with 30. So, in your case, the first decade will see little paid off the debt.