Overpaying mortgage not reducing interest

Confused_Pigeon

HSBC say they calculate their mortgage interest daily. I overpay my mortgage by 1k every month (annually less then 10% of capital borrowed so no fee). Despite reducing the capital owed every month my interest doesnt reduce in the long run it seems to go up or down by about ten pounds overall stays the same. Am I missing something here, if I reduce the capital borrowed by 10k annually should interest not go down too? If anyone can put me out of my misery it would be much appreciated. Many Thanks. 

Newbie_John

Your mortgage period is getting shorter. Let's say your monthly payment is £1000, each £1000 overpayment shortens your mortgage by 1 month + the interests, so let's say 1.5 months less overall.

mChavez

Your interest should reduce.

Are you confusing your monthly payments with monthly interest charged by any chance? If that's the case then previous poster is right - they can keep your monthly payment the same, but more of it goes to capital.

BikingBud

Confused_Pigeon said:

HSBC say they calculate their mortgage interest daily. I overpay my mortgage by 1k every month (annually less then 10% of capital borrowed so no fee). Despite reducing the capital owed every month my interest doesnt reduce in the long run it seems to go up or down by about ten pounds overall stays the same. Am I missing something here, if I reduce the capital borrowed by 10k annually should interest not go down too? If anyone can put me out of my misery it would be much appreciated. Many Thanks. 

The interest will be going down:


The split of the £1000 will vary according to the graphs.

BikingBud

No wonder people are confused when they don't come back to see what people may offer in response to their queries!

Confused_Pigeon

Just to clarify I meant the monthly interest payment doesnt go down despite the overpayment. Should have also said its a 5 year fixed capital repayment mortgage. I thought if I overpay that would obviously reduce the months/years from the original projections as paying off the capital owed but it would also reduce the monthly interest paid as there is less capital to pay the interest on. Thanks for your replies (Only the helpful ones)