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Confused by Mortgage Payments
FinanceHeadache
Posts: 1 Newbie
Hi
I currently pay around £2000 per month on our fixed rate mortgage (3.5%, due to increase to 5.6% next year).
Every month £2000 is deducted from the mortgage account but approx £500 is then put back into the debt.
I don’t understand where this 25% comes from - doesn’t seem aligned with interest as it’s far too much.
any help appreciated
confused
I currently pay around £2000 per month on our fixed rate mortgage (3.5%, due to increase to 5.6% next year).
Every month £2000 is deducted from the mortgage account but approx £500 is then put back into the debt.
I don’t understand where this 25% comes from - doesn’t seem aligned with interest as it’s far too much.
any help appreciated
confused
0
Comments
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It is the daily interest on the outstanding mortgage. You are effectively paying 500 interest and 1500 off the house. As time goes by you will see the interest reduce together with the outstanding balance
If you are able to state the mortgage balance and term remaining then the calculation can be shown0 -
£171,428 approx mortgage balance?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.2
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It is your interest that is added.0
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What is the mortgage balance - the interest is 3.5% of that, not of the amount you pay off each month.
You'll find the interest added goes down each month, meaning more of your payments are going towards capital.1
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