Capital vs Interest pay off

rigby44

Hi all,

I'm hoping that someone might be able to explain the below, I'm sure it's correct at the banks end and it's just my inexperience that needs addressing.

We bought our house in Dec 2020 for £220,000 with a £45,000 deposit - so we borrowed £175k from the bank.

I've worked out that over the last three years we've repaid approx £21,000 in monthly submissions.

My question, is that the mortgage balance still stands at £164,600 at present. So of the £21,000 I've paid back, is it the case that only £10,400 of this has gone on the capital, with £10,600 hoovered up by interest?

I spoke to the bank, and they tell me that capital vs interest as a split of the monthly payment is approx 50/50, but it should be weighted slightly in favour of capital - which is not in line with my repayments above.

I'd be really grateful if anyone can tell me if the above sounds about right. I'm aware that the first years of a mortgage are the most painful, but seeing such a tiny dent made in the capital is depressing!

Ayr_Rage

The split is available here, just put in your figures.

https://www.calculator.net/mortgage-calculator-uk.html

The bank were telling you porkies about a 50/50 split, that will happen in year 11/12 on a 25 year term.

Edit : Based on borrowing £175,000 over 25 years at 5%, your actual tipping point will vary on the rate and term.

rigby44

Ayr_Rage said:

The split is available here, just put in your figures.

https://www.calculator.net/mortgage-calculator-uk.html

The bank were telling you porkies about a 50/50 split, that will happen in year 11/12 on a 25 year term.

According to the below calculator you move to paying off more capital then interest as of year four? Apologies if i’m confusing it.

https://www.calculator.net/amortization-calculator.html?cloanamount=175%2C000&cloanterm=35&cloantermmonth=0&cinterestrate=2.15&cstartmonth=11&cstartyear=2023&cexma=0&cexmsm=11&cexmsy=2023&cexya=0&cexysm=11&cexysy=2023&cexoa=0&cexosm=11&cexosy=2023&caot=0&xa1=0&xm1=11&xy1=2023&xa2=0&xm2=11&xy2=2023&xa3=0&xm3=11&xy3=2023&xa4=0&xm4=11&xy4=2023&xa5=0&xm5=11&xy5=2023&xa6=0&xm6=11&xy6=2023&xa7=0&xm7=11&xy7=2023&xa8=0&xm8=11&xy8=2023&xa9=0&xm9=11&xy9=2023&xa10=0&xm10=11&xy10=2023&printit=0&x=Calculate#calresult

Hoenir

rigby44 said:

I spoke to the bank, and they tell me that capital vs interest as a split of the monthly payment is approx 50/50, but it should be weighted slightly in favour of capital - which is not in line with my repayments above.

How long is your mortgage term. The greater the length the less capital you'll be repaying in the earlier years. Overpaying your mortgage even just by a nominal sum every month. Will very slowly make inroads. Like rolling a snowball over time the benefits will accrue. A marathon not a sprint.