Hi I have an interest only tracker mortgage of 37690 with an interest rate of, at present, 2.25% which gives a payment of 70.55 per month according to Halifax. It will be going down to 1.75% when the latest bank rate cut of .5% is applied.
By how much would my monthly payment be reduced for every 1000 I overpaid my mortgage? Thanks Jan
You must have mistyped £70.66 (and it's actually closer to £70.67).
So then your payments would go down to £54.96.
I don't mean to be rude, but if you can't work this out by yourself, there must be something wrong with you, i.e. it suggests you would be unable to work out your annual spending on milk if you bought one pint a day at 45p each. If you were on a repayment mortgage, then it would be a bit of a challenge to work out without some specialist savvy, but for interest-only, it's simple primary school level arithmetic.
If the new interest rate is 1.75%, then for each £1000 you owe, you would pay £17.50 interest per year (or £1.46 per month), and hence for each £1000 you no longer owe, you'd pay the same amount less.
Hi I actually had it worked out as you did =((1.75%*37690)/12) and did get your figures but Halifax say 70.55 not 70.67 and I was just trying to see if someone else got my figures. So who is correct? you and I or Halifax? And I also got 54.94 for 1.75%. All I wanted was confirmation of my own figures as they disagree with what Halifax are saying. In fact for all the years I have had a mortgage they have never had the same figures as I. Jan
You and I, obviously. Unless 2.25% or £37690 are themselves wrong.
I suppose what can sometimes happen is that the timing of changes in interest rate do not cooincide with the timings of when your payments are collected (presumably by DD) and of when the payment amounts are updated. Some lenders may only change the payment amount once a year, but if during the year the interest rate goes down, and your payments are not adjusted immediately, you could end up overpaying a little. As a result you may find that the amount owing has gone down a bit and may no longer be the full £37690 which you originally owed. It could, for instance, be £37630.
They usually send you a mortgage statement once a year. It's worth scrutinising it if you're worried about such slight discrepancies.
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