Re: First year of repayment mortgage, WTF!

Peter Saxton wrote:

On Thu, 14 Sep 2006 08:44:22 GMT, Ronald Raygun
<no.spam@xxxxxxxxxxxxxxxxxxxxx> wrote:

Let me pluck some figures out of the air which I guess to be in
the right ball-park.

Say you borrowed £96k at 5%, which at interest-only would be £4800
a year, or £400 a month. A repayment over 25 years for the same
parameters would cost £6811 a year or £568 a month. £6811-£4800
is about £2k. See?

There is no split.

Of course there is, though it isn't usually made explicit to you in
advance, and of course the split isn't constant. You usually get an
annual statement which details how much interest you've been charged
during the past year and how much capital you've paid off.

You don't pay some interest and some capital. You
borrow, get charged interest and make repayments continuously until
the debt is cleared.

That's rubbish. You pay a fixed amount each month, and some of each
payment is interest on what you owed during the last month, and the
rest reduces what you owe.

All that is happening is you are reducing your debt at a faster rate.

Exactly.

.

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