Re: First year of repayment mortgage, WTF!

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

public.mark.m@xxxxxxxxxxxxxx wrote:

We got our first year mortgage statement to find paying @£560 quid a
month only paid off around 2k of the balance!. almost all of it went on
the interest!. I thought it would have been 50/50 with capital and
interest and cant find anywhere where it mentions this in my mortgage
documents. Can I expect this ratio to change?

You can't find anywhere it says this? Doesn't it tell you what the
interest rate is? From that you could easily work out how much you
would be paying each month if you were paying interest only. As a
good first approximation, if you multiplied the difference, between
that and what you're actually paying each month, by 12 you'd get what
you're paying off during the year.

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

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

--
Peter Saxton from London
peter@xxxxxxxxxxxxxxxxx
.

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