Nationwide Mortgage - Am I being ripped off with the interest payments?

Chippenham

Hi All

As we know, software related to calculating money can go wrong and is only as good as the data input to provide calculations (Lets remember the post office scandal shall we). That includes whether the original calculations and in this case, how much interest is added t my mortgage, is worked out. 
I have been tracking my mortgage for around 5 -6 months as I was concerned more interest was being added than I was expecting. I now log in as often as I can to record the daily interest added so as to track this change. 

My mortgage was originally for £300000 over 25 years but we substantially overpay to reduce the term. The interest added each day, I appreciate can change very slightly but the basis of my concern is as follows and please feel free to correct me if I am wrong: - 
1. As payments are made, the interest added daily reduces in relation to the interest added prior to the payment. 
2. The interest added should over the duration and as each payment is made, reduce at an increasing rate. As payments are made, you pay off a proportion and some is paid as interest to the lender. As you make payments each month, the amount actually paid off increases gradually so the interest should reduce but at an increasing rate after each payment you make, in essence an exponential downward curve. 

There is my problem. I am paying significant amounts of my mortgage but the rate the interest is reducing is slowing down rather than speeding up: -
June '25 £154.93 added in interest, averaging at £17.16 per day
July '25 £519.20 added in interest (31 day month), averaging at £16.75 per day, a difference of 42p per day
August '25 £508.14 added (31 day month), averaging at £16.39 per day. a difference of 36p per day
September, a difference of 35 p per day but only a 30 day month
October is 37p a day difference, back to a 31 day month
November is working out to only a 32p a day difference. 
Same mortgage payments, same overpayments, same payment dates but the maths just don't add up?
That difference each month increases the payment taken OFF the mortgage, and should actually increase over time and its gone from 42p down to 32p per day

Nationwide have been challenged and their response has been 'we've checked and our calculations are right'..... they have not provided any suitable breakdown of how they work this out. 

Chippenham

June 25 was £514.93 by the way....

ChadValley

Check to see if your mortage deal has a floor for the interest rates, check how much over payment you can make, if any without paying a penalty.
I have had an issue with them regarding the tax assesment on fixed bond saving, NW and HMRC blamed each other and said it wasn't for them ot sort out, I got my money back in the end, but nither one would admit to being at fault. 

Isthisforreal99

Without seeing opening closing balances each month and dates of payments/overpayments it's impossible to check.

Edit - and the interest rate of course.

BikingBud

Chippenham said:

Hi All

As we know, software related to calculating money can go wrong and is only as good as the data input to provide calculations (Lets remember the post office scandal shall we). That includes whether the original calculations and in this case, how much interest is added t my mortgage, is worked out. 
I have been tracking my mortgage for around 5 -6 months as I was concerned more interest was being added than I was expecting. I now log in as often as I can to record the daily interest added so as to track this change. 

My mortgage was originally for £300000 over 25 years but we substantially overpay to reduce the term. The interest added each day, I appreciate can change very slightly but the basis of my concern is as follows and please feel free to correct me if I am wrong: - 
1. As payments are made, the interest added daily reduces in relation to the interest added prior to the payment. 
2. The interest added should over the duration and as each payment is made, reduce at an increasing rate. As payments are made, you pay off a proportion and some is paid as interest to the lender. As you make payments each month, the amount actually paid off increases gradually so the interest should reduce but at an increasing rate after each payment you make, in essence an exponential downward curve. 

There is my problem. I am paying significant amounts of my mortgage but the rate the interest is reducing is slowing down rather than speeding up: -
June '25 £154.93 added in interest, averaging at £17.16 per day
July '25 £519.20 added in interest (31 day month), averaging at £16.75 per day, a difference of 42p per day
August '25 £508.14 added (31 day month), averaging at £16.39 per day. a difference of 36p per day
September, a difference of 35 p per day but only a 30 day month
October is 37p a day difference, back to a 31 day month
November is working out to only a 32p a day difference. 
Same mortgage payments, same overpayments, same payment dates but the maths just don't add up?
That difference each month increases the payment taken OFF the mortgage, and should actually increase over time and its gone from 42p down to 32p per day

Nationwide have been challenged and their response has been 'we've checked and our calculations are right'..... they have not provided any suitable breakdown of how they work this out. 

Try looking at either of these and use the linked spreadsheet to check your own understanding:

4 October 2022 at 11:42PM

2 July 2024 at 11:36PM

I use this and my interest is correct to within 1p per month.

MWT

Chippenham said:

There is my problem. I am paying significant amounts of my mortgage but the rate the interest is reducing is slowing down rather than speeding up: -

Without the open/closing balances and dates mentioned it is hard to be precise, but as a general comment, as the capital reduces over time the amount of interest that forms part of your payments also reduces so the relative proportions are not fixed and the rate of reduction in interest that you achieve cannot therefore continue to increase.

BikingBud

In general terms this is what can be achieved:



And as the blue curve drops by more, 10% per annum overpaid at the start of the year, the total amount repaid, the area under the graph drops more. This is saved interest you will save the slope of the curve adjusts this is a normal decay curve. Mortgage interest follows this typical curve.