mortgage company sold to servicing company

[Deleted User]

connor08 said:

 however engage credit did say that if i over paid on my mortgage if i paid the 411.00 off my interest only and then paid another 400.00 over payment it would be like capital and repayment . but why should i 

You should do it because you want to clear the mortgage before the term ends. The only way you'll do that is by paying more.

Thrugelmir

connor08 said:

i just dont understand that if they cant offer a lowered rate or change to a fixed rate how can they make rate changes when the bank of england base rate change does anybody have an idea how they can do that 

Borrowed money is at variable rate. Changes get passed on. 

connor08

thanks everybody but 800.00 is not in my budget i can have a capital and repayment for cheaper elsware even if it means me moving to another company like kensington i am not paying 400 for interest only then another 400 for capital no way 

[Deleted User]

If you can't afford £400 to pay off the capital, then pay the amount you can afford. 

No point in putting it as the capital is the same wherever you go.

400ixl

connor08 said:

thanks everybody but 800.00 is not in my budget i can have a capital and repayment for cheaper elsware even if it means me moving to another company like kensington i am not paying 400 for interest only then another 400 for capital no way 

There is no difference really in theory, as you pay the capital down, the interest will also drop as it is based on the amount of outstanding capital. So whether that is overpaying an interest only, or having a repayment mortgage if the interest rate is the same, the outcome is the same.,

The difference will be the way they are calculated. With the interest only version they have likely said it will take £400 a month for X months to pay down the capital (total capital / outstanding months). But what they haven't calculated into that is that the interest will be dropping each month as there is less capital borrowed. With the repayment mortgage they work out what the average payment would be over the total length to pay down the capital and the interest where you will start by paying less off the capital but as you eat into it eventually it pivots to be more paid off the capital until it is zero.

So if the repayment mortgage was for example 25 years and 2% interest and they calculate that £600 per months pays it off, then if the interest only was also 25 years and 2% with £400 being the interest you could add £200 and over the term you would also get down to zero.

The typical way this was achieved was that you didn't overpay the interest only mortgage, but you took out a parallel investment line in the way of an endowment. Here you paid money into a separate policy which was then invested and over the term of the mortgage your regular payments + the compounding investment were worth the same at the end and you paid one off with the other.

So as you can see there are ways to pay off the interest only mortgage as if it were a repayment mortgage through over payments, or by having an investment method alongside it to pay it at the end. What you really need to know is what is the figure that you need to pay monthly as a fixed amount to pay off the interest only mortgage over time (as if it were a repayment mortgage) or how much to invest into a growth policy to build funds to pay off the mortgage at the end of the term.

connor08

thank you you have been very helpfull this is the first time i have actually understood it has reduced as we paid 2,000 off it 2years ago i can work with this so i have saved your post you have been very helpfull  so having that in black and white for me has helped me see a way forword . bless you 

connor08

thank you you have been very helpfull this is the first time i have actually understood it has reduced as we paid 2,000 off it 2years ago i can work with this so i have saved your post you have been very helpfull  so having that in black and white for me has helped me see a way forword . bless you 

connor08

thank you you have been very helpfull this is the first time i have actually understood it has reduced as we paid 2,000 off it 2years ago i can work with this so i have saved your post you have been very helpfull  so having that in black and white for me has helped me see a way forword . bless you