New fix isnt as good as I thought

Strikeman

Our initial 3 year fix with Coventry came to an end in March, so we refixed again as theyhad the best rate for us:



Initial fix when we bought the property

Term: 35 years
3 year fix rate: 2.69%
Monthly cost: £700
Actual payment: £850

of which was interest: £400
of which is capital: £450



New fix for another 3 years

Term: 32 years
3 year fix rate: 1.69%
Monthly costL £592
Actual payment: £850

of which is interest: £392
of which is capital: £458



Does this seem right that I've made a 37% interest saving moving to this new fix and yet my interest repayment deduction is only £8 so only an additional £8 going towards the capital each month?


I was hoping we'd get a bit of a snowball effect where the interest would reduce by 37% (because of the rate move from 2.69% to 1.69%) and more would be pushed to the capital if we maintained the £850 a month payment


Bit confused!?

Strikeman

Purchase price was £210,000 with an initial mortgage of £190,000 (90% LTV)


Current market value circa £250,000 with an LTV of 70% on £175,000

getmore4less

you missed out important info so having to reverse engineer(guess)
edit : added while doing the calcs, not doing them again they are close enough.

old mortgage

35 years after 3 y fix
£190,400 2.69% £700 £180,100
Interest month 1=£427, month 36 £404

with overpayment
£190,400 2.69% £850 £174,552
Interest month 1=£427, month 36 £392

32 years
£175,500 1.69% £592pm
interest month 1 £247pm

that would line up with a £1k fee

Amount borrowed looks right.

your calculation of the interest per month is wrong if you get £392

if this is the first payment the interest may be for more than single month depending when the switch happened.

kuratowski

Where do you get the £392 of interest? I calculate your monthly interest is now approx £246. (Excel: =IPMT(0.0169/12,1,384,175000)

Strikeman

Hi guys thanks for feedback


I didnt actually calculate it I was on the phone to customer service op as I wanted to check to see whether the DD would still be in place at £850 or whether I needed to reinstruct to overpay to 850 again once the new 3 y fix starts


On the phone I asked for the new breakdown and thats what she said it was


Those 2 figures you've pasted seems more logical to me and correct.



Maybe the customer services op was wrong??


This will be the first month payment as the refix started from 01.04.19

getmore4less

probably last months interest.

with overpayment
£190,400 2.69% £850 £174,552
Interest month 1=£427, month 36 £392

Strikeman

Just gave them another call. They CS unsure over the phone so lending team are going to write to me with the correct split?


I think that £392 that was quoted to me before must have been wrong!!

Strikeman

getmore4less wrote: »

probably last months interest.

Yes thats it! Thanks for your help

dimbo61

Customer service team may find it difficult working it out there and then !
With online banking and instant daily updates I used to check nearly every day how much our balanced increased and how much it went down with monthly mortgage payment.
Sad I know ( offset mortgage with YBS )
The nice mortgage person at the YBS was impressed when I gave her all the correct figures for our mortgage cost and daily interest.
I use " whatsthecost " but even that only works in whole years.

Strikeman

Thankfully the letter arrived and it did show the new interest amount of circa £243, so in line with the calculations put forth on here!


Thanks for your help on this. Let the snowballing continue!