Gut feeling I paid off my mortgage but I am still paying!

d4rr3n

seashore22 wrote: »

If you owe £27,000 it's not paid off, is it?

I have to say that relying on gut feeling is an odd approach to finance. Only cold hard facts will do.

Obviously not, yet I think it should be considering I have been paying it off at a faster rate (my monthly repayment has remained the same since 2008) so not completely gut!

Thrugelmir

d4rr3n wrote: »

What I cant understand is since the base rate dropped significantly over the years (yet my repayments remained the same) I have obviously been paying off the mortgage at a much faster rate so you would expect the term of the mortgage to be significantly reduced ?

Your mortgage term is due to end in late 2021. In around 10 months your mortgage will be cleared at current repayment levels. Would appear that you've reduced the term by at least 18 months. Not at all bad.

Takmon

d4rr3n wrote: »

Obviously not, yet I think it should be considering I have been paying it off at a faster rate (my monthly repayment has remained the same since 2008) so not completely gut!

Have a look at how the UK base rate has moved over the years you have had your mortgage.

In 2008 the base rate dropped significantly which was when your monthly payment decreased. Since then has it remained at a low level so it makes sense your payments have remained the same.

I can't see how you think you have been paying it off at a faster rate when your monthly payment has remained the same since 2008?

seashore22

But they've been sending you statements, so it's easy to check the progress of your mortgage.

Are you saying that you think a mistake has been made? If so check the statements and see what they have to say. The figures should be there for you to look at.

Have you received letters to say that the interest rate has dropped since 2008? I assume not.

I think you can opt to keep the repayments at the same rate if the interest rate drops, therefore paying more off your mortgage. It doesn't sound like you've done that.

d4rr3n

Takmon wrote: »

In 2008 the base rate dropped significantly which was when your monthly payment decreased. Since then has it remained at a low level so it makes sense your payments have remained the same.

The reduction of repayment in 2008 had nothing to do with a change in bank base rate. It was because I was struggling to make the large payments so they agreed to drop it slightly.

Bank base rates currently are 0.5 as of 2009, in Feb 2008 my mortgage review says they are currently 5% but the table below says 2%. Anyway my repayments of 3359 has been the same since 2008 so big difference between 5% and 0.5% as of 2009, hence my reason for thinking a significant reduction in term of mortgage.


UK Bank base rates

2001 4%
2002 4%
2003 3.75%
2004 4.75%
2005 4.5%
2006 5%
2007 5.5%
2008 2%
2009 0.5%

When my mortgage started in 2002 my bank says its base rate is 4.75 Bank of England says 4. In 2008 my bank says its 5 Bank of England says its 2.

[Deleted User]

There's going to be some significant accrued interest from when you reduced the payments below the contractual ones.

What sort of mortgage was it? You said it was variable, but you also mention the base rate which suggests it was a tracker. What was it and what is it now?

seashore22

d4rr3n wrote: »

The reduction of repayment in 2008 had nothing to do with a change in bank base rate. It was because I was struggling to make the large payments so they agreed to drop it slightly.

Bank base rates currently are 0.5 as of 2009, in Feb 2008 my mortgage review says they are currently 5% but the table below says 2%. Anyway my repayments of 3359 has been the same since 2008 so big difference between 5% and 0.5% as of 2009, hence my reason for thinking a significant reduction in term of mortgage.


UK Bank base rates

2001 4%
2002 4%
2003 3.75%
2004 4.75%
2005 4.5%
2006 5%
2007 5.5%
2008 2%
2009 0.5%

I'm confused. If you paid less than was agreed when you took the mortgage out, why do you think it should have been paid off early?

getmore4less

d4rr3n wrote: »

Thanks everyone, I cant put all the details here but the basics should be enough to get an idea if there is an overpayment.

I purchased a house for 470k in winter of 2001, got a 100% mortgage (those were the days) for 470k. First draw down to commence Feb 2002 of 3,564 per month. Term 20 years variable repayment mortgage @ 2% above base rate (which was 4.75% when this mortgage commenced).

20years
£470k 0% ~£2kpm
£470k 4.75% £3040pm
I guest you mean
£470k 6.75% £3570pm
Feb O2 base rate was 4% not 4.75 (changed Nov 01)
£470k 6% £3,370




Every month I paid 3564 up until June 08 when my monthly payments were reduced to 3359 per month. The interest remained the same 2% above bank base rate (which was 5% in 2008).


Up until now I have been paying 3359 per month. Even though the bank base rate dropped over the years my monthly repayment remained the same.

I currently owe 27k outstanding according to my mortgage account

What I cant understand is since the base rate dropped significantly over the years (yet my repayments remained the same) I have obviously been paying off the mortgage at a much faster rate so you would expect the term of the mortgage to be significantly reduced ?

need more details because something looks wrong at the start

more accurate base rate changes
https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

d4rr3n

seashore22 wrote: »

I'm confused. If you paid less than was agreed when you took the mortgage out, why do you think it should have been paid off early?

Because I am paying off at 2% above base rate. In 2002 base rate according to my bank was 5%. Bank of England base rate is now only 0.5. So my 20yr mortgage was calculated as paying off at a rate of 2% above a base of 5. So I am paying it off at a faster rate then originally calculated back in 2001.

I pay off 205 less per month then original mortgage.

d4rr3n

Deleted_User wrote: »

There's going to be some significant accrued interest from when you reduced the payments below the contractual ones.

What sort of mortgage was it? You said it was variable, but you also mention the base rate which suggests it was a tracker. What was it and what is it now?

It actually doesn't say what type of mortgage it is other then I am paying off at 2% above bank base rate though my repayments have stayed the same other then when I requested the reduction in 08