New fixed rate but not much saving

richd70

My current 5yr fixed rate mortgage will finish in 4months, so I looked around to see what deals were out there. To my surprise, my current provider, Halifax, seems to be the best available, and as it's the same company, there's no fees. But I was surprised I didn't save more during the change - going from 2.14% down to 1.30% for 5yrs, took my payments from £1702pm down to £1583pm, a reduction of £119pm. Does that sound right? Outstanding amount is £310k over 18yrs 4mo.
Thanks

richd70

I guess it's £310k / 220months which is £1409. And then I thought it would be £310k X 1.3% which would be £4,030, which, if you divide it by 5yrs you get £67pm, don't you? Shouldn't repayments be £1409+£67?

South_coast

The interest isn't a one-off charge on the total balance, it's paid every month and is a percentage of the balance at that point in time, divided by days in the year, multiplied by days in the month. It's a fixed rate, not a fixed interest payment. At 1.3% it will be more like £340 per month, but that figure will only be correct for the one month your balance is exactly £310,000. Each month the ratio between interest and capital will shift slightly as your balance will be slightly less but your payment remains the same

jimjames

At those interest rates the interest portion of the repayment will be relatively small so the rate change will make less of a difference as you have found.

I'm also waiting to switch at the end of my fix and finding similar to you that the rate is making little difference to repayments. My mortgage has under 5 years to go so interest is even less significant in each monthly payment

unkle

Payments look right according to my spreadsheet. 

Thriftmaster1973

Yes it's showing the same here too.

Get some extra money thrown in and watch yourself saving the £££'s!

getmore4less

That just the way amortization works to keep the payment the same as the monthly interest goes down 
starts at £310,000*0.013/12=  £334
Goes down to ~ZERO for the last payment.

I guess it's £310k / 220months which is £1409. And then I thought it would be £310k X 1.3% which would be £4,030, which, if you divide it by 5yrs you get £67pm, don't you? Shouldn't repayments be £1409+£67?

That's 1.3% a year not more like £20k interest not £4k

BUt because you are paying a bit off each months it will be less 

here are your 5y numbers.(1.29%)

amount	rate	payment	owing	interest
£310,000.00	1.29%	£1,583.03	£232,584.91	£17,566.79

edit : Forgot to put in your savings.

amount	rate	payment	owing	interest
£310,000.00	2.14%	£1,704.78	£237,118.71	£29,405.28

£12k in interest and £4,500 less debt  not to shabby