A noob mortgage question

pault123

Hi guys

I'm 3 years into a fixed 5 year mortgage deal at the moment, capital and interest.

Its my understanding that i'm currently paying a higher percentage of interest than capital and as I go further into the 25 years this balance shifts and I start paying more off the capital. Thie ties in with advice I should make overpayments early in the mortgage as this goes directly off the capital and reduces my interest in the future?

My main question and i'm not sure how to phrase this, is after my fixed term runs out and I remortgage for the remaining 20 years; does the new mortgage company take into account ive been paying more interest than captial % mix for the last five years and adjust this so I start paying more capital off?

I'm having visions of switching after my 5 years fixed ends and then being back to square one of paying an uneven balance of interest vs capital - as opposed to staying with my original mortgage company being put on a higher rate after the fixed term but the capital receiving higher rate of clearance.

hope the above makes sense!

herbiesjp

As long as you carry on with the remaining term of 20 years, then the result is the same

homer_j_3

There was a similar post yesterday on the same lines as this.

If you switch lender then your repayments will go through the same ratio shift, however as its over a smaller term, the ratio shifts quicker.

When you come to the end of the 5 yrs, see what current lender offers and compare to rest of market.

pault123

thanks guys,


its northern rock so I don't have much hope after their recent letter explaining they will *help* me choose someone else after my term :rotfl:

Dick_here

I think I see what you're worried about. It would be an issue if you took out another 25 years at the end of your first five.

pault123

homer_j wrote: »

There was a similar post yesterday on the same lines as this.

If you switch lender then your repayments will go through the same ratio shift, however as its over a smaller term, the ratio shifts quicker.

When you come to the end of the 5 yrs, see what current lender offers and compare to rest of market.

Any idea what the similar post was called wouldn't mind a look :j

homer_j_3

It was this one.
http://forums.moneysavingexpert.com/showthread.html?t=848829

pault123

That other post is exactly what I was reffering to!

Particularly

"This is what the OP is getting at - they were not aware that the repayment split of interest and capital would start again. Its not a way I would look at it but I can see where they are coming from."

It would be nice to pay the mortgage off early, but at the moment I can't afford any overpayments hence paying a lot of interest and the loan not going down much.. I don't like the idea after fixed term ends and i'm obviously going to change for the best interest rate my int/cap % ratio starts again - if it didn't I could pay it off earlier?