Mortgage interest doesn’t add up!

leathers123

I have a HSBC mortgage 5yrs ago it was £185000, 10yr term @1.59%. HSBC stated over the life of the mortgage I would pay back £12911 in interest. Now with 5yrs left after paying £1415 a month. I have already paid £12843 in interest. Their calculator, and my documentation states the same value but how does the maths work. So in 5 more years of paying £1415 I would have paid at least £4000 more than they quoted and their calculator states.

anyone able to explain this, feel like it’s all a con! 

sammyjammy

What term are you repaying your mortgage over (not your fixed rate term), even if your mortgage is only 10 years I would expect around £15k in interest over the ten years.

leathers123

Correction for the above post was a £156900 mortgage not 185!
10 years, when I started this mortgage 5 yrs ago I had 10 yrs remaining as my term.

MikeJXE

I can't wait for someone to explain this 

herebeme

How are you calculating the “already paid” £12,843 interest? HSBC doesn’t provide this cumulative total in their annual disclosure letter so I assume you have manually added up the amounts? Are you totally sure you have made no errors? Have you downloaded 5 years worth of annual disclosure letters from my documents and looked at the interest charged column total in each statement (probably on page 3 of the letter)? 

Have you made any overpayments? Any overpayments above the level that an EPC would kick in? - that would add a big amount of additional charges. 

Edit. And just confirming… This is a 10 year fix, or a 2 year fix with a reversion to SVR after that? 

leathers123

So:
£156900 loan amount 
After 5yrs I have £85000 left 
Meaning I have paid of £71900
monthly payments for 5yrs = £84900
84900 -71900 = £13000

I understand the interest amount will lower over the 5 yrs but why do the online calculators and my original documentation state a value that’s far lower.  

leathers123

No overpayments, or charges on the account just my normal payments 

MorningcoffeeIV

And what was the term of the fixed rate?

herebeme

That’s simply not how to calculate the interest you have paid. There are manual ways to do it, with a spreadsheet, but it’s really not at all as simple as you have laid out. 

Download the annual disclosures - look at page 2 and page 3. You see your payment coming off and then the interest going on each month. The total interest paid column on page 2 or 3. 

Or just open the app now. Add up your interest payments for the last year - what are they? Add the actual interest amounts stated, don’t do your “shortcut” thing. 

Annisele

leathers123 said:

I have a HSBC mortgage 5yrs ago it was £185000, 10yr term @1.59%. HSBC stated over the life of the mortgage I would pay back £12911 in interest. Now with 5yrs left after paying £1415 a month. I have already paid £12843 in interest.

I can't make those figures work at all.

I reckon that if you'd had a £185,000 mortgage over a fixed term of 10 years, with a total term of 10 years, and a rate of 1.59%, then your monthly payment would have been in the region of £1,668 (not £1415 a month). That would give total interest of £15,200 or so.

Trying to work the other way, with a £185,000 mortgage and assuming an interest rate of 1.59% and a monthly payment of £1415, I make the term about 12 years. Is it a 12 year term with a 10 year fix?

But then you give new figures later on, and they confuse me even more:

leathers123 said:

So:
£156900 loan amount 
After 5yrs I have £85000 left

Five years ago, was the balance £185000 or £156900?

MikeJXE

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/