Equity?

MEEKUS

Hi
I am confused as it seems like my equity in my home isn't going up even when I am making payments.

Some background
I have 20 years left of on mortgage paying
£364.94/month and my mortgage account is 58,617.00.

My house is worth 120k.

Last month I calculated that my equity would be £61,598 but now I calculate it is £61,383.

Am I doing something wrong and not understand how this works?

Sorry if im being daft.

Isthisforreal99

Genuine question, why are you doing this and why does it matter?

And without seeing your calculations it's impossible to say.

Bear in mind that most of your monthly payment is swallowed up by interest.

sgthammer

Even with *most* of your payments covering interest rather than principal, you shouldn't be £215 deeper in the hole today than you were a month ago. How did you get to the previous figure?

Did you get any kind of breakdown of the payment schedule when you took out your mortgage? Have you remortgaged at some point and missed a change in the interest rate?  Something's off somewhere.

MEEKUS

Hi - thanks for the reply

I have 19 Years 10 Months left on my mortgage. I have recently remortgaged as my other 5 year fix came to a end in September this year. It was a 2.11% fix and now a 4.32% fix. Could this be the reason?

MEEKUS

I also use this calculator to work out the equity 

https://www.natwest.com/mortgages/mortgage-calculators/equity-calculator.html

MEEKUS

Isthisforreal99 said:

Genuine question, why are you doing this and why does it matter?

And without seeing your calculations it's impossible to say.

Bear in mind that most of your monthly payment is swallowed up by interest.

I use the house valuation from 6 months ago and my mortgage balance for the calculator.
Then input in this calculator. 
https://www.natwest.com/mortgages/mortgage-calculators/equity-calculator.html

I am bothered because we are planning to move house in next two years and would like to know how much equity I have in the house so I csn then use it as a deposit 

kingstreet

As the mortgage balance would usually increase during the month until the day after your monthly payment is made, always calculate your balance on that same date each month.

Bigphil1474

Your mortgage amount will be going down by about £1,800 this year - at 4.32% your interest is roughly £2530 for the year, your payments are £4,379.28. Which works out about £150 a month reduction. As above, make sure you are comparing the same day e.g. day after payment made.

dunstonh

I am confused as it seems like my equity in my home isn't going up even when I am making payments.

You dont make payments to your home.  You make payments to your mortgage.

Am I doing something wrong and not understand how this works?

House prices are falling.  Does the calculator reflect that in its assumptions?

At the end of the day, the only value that matters is the mortgage balance.  Is that falling each month?

MEEKUS

Thank you everyone 

Exodi

kingstreet said:

As the mortgage balance would usually increase during the month until the day after your monthly payment is made, always calculate your balance on that same date each month.

This.

For example, if we assume my mortgage payment is £1600 and my balance is £201,600, this means that when I make my monthly mortage payment, my balance reduces to £200,000, but then every day that passes additional interest is added to it, for me it's around £40 currently.

If I was then to compare my balance straight when the payment was made (£200,000) to 30 days later before the next payment (£201,200) I might come to the conclusion that my balance is going up.