[Closed] Mortgage/Remortgage

When you remortgage you don't remortgage for 25 years...you remortgage for the shorter duration i.e. 22 years.

So you've got the same mortgage amount over the same period even after remortgaging...but hopefully on a better rate.

Do you want me to send you a spreadsheet that breaks everything down for you? Show's how capital repayment v interest works - and lots more too.

mudshark, could you please send it to me as well. I'd be very interested.

Sent - change the values in dark yellow to suit you.

+1 please Mudshark....! 😆

You mail address isn't in your profile so let me know.

Is your mortgage interest only or repayment? Sounds like repayment.. which means that your payments comprise, part the loan, and part the interest on that loan. Obviously as you say in the early days of a loan, the proportion of interest you pay is higher cause the loan value is higher. However, if you are on a repayment then you are effectively paying off your loan from day one - not as you are suggesting towards the end of the term. If you are switching to get better interest rates then, no, you won't be paying more interest - assuming you continue to reduce your loan, and not borrow more. Also as above - the mortgage term you choose will affect payments - shorter term, higher payments. Have a play with this calculator to see how the different variations affect your payments http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

In the long term the best thing you can do (if you are able) is overpay. This will dramatically reduce the amount you pay in interest and the overall term that your mortgage runs. Handy calculator here http://www.lcplc.co.uk/calculators/effect-of-overpayments/ [insert disclaimer ... I am no expert, so feel free to ignore me ...] 🙂

edit - or just let mudshark help you!

Mudshark, yes please!
dont_jump_jimiATyahoo.co.uk
Thank you.

I understood the repayment over a shorter time bit, but it still didn't totally make sense (i.e. why in that case wouldn't you just take the original mortgage out for that shorter amount of time and skip all that extra interest that you have paid?)

I'm glad I'm not the only one that wants to know about this!

+1 Mudshark. Can you send to me too pls? Tarp.

Thanks ART.
I won't ignore you, you appear to know much more than I.

I just seem to remember being told that the lenders like to rake back most of the interest in the early days. I must have not quite grasped that properly.

why in that case wouldn't you just take the original mortgage out for that shorter amount of time and skip all that extra interest that you have paid?

Paying off 100k in 12 months may prove to be a chalange for some!

danj DOT heywood AT gmail DOT com

Thanks

I created the spreadsheet when I realised how little people understand personal finance - even some of the people at lenders who were supposed to know this stuff. Not found anything on the web to match it.

BTW, I went to school with Martin Lewis so you can trust me 😉

I'd like a copy of that too mudshark if you don't mind - sounds very handy. Will mail you from my work account as can't get the one in my profile from here.

Cheers Mudshark.

That's a funky tool.

Looks like the total 25yr payback is easily 40-60% over LV depending on your int rate. Nice. Good to know someone's doing alright out of this.

Mudshark - Thanks much, cracking spreadsheet.

It suggests that I am paying off more of the loan each month than I remember having paid off through experience. My memory is poor though.

Is there a standard ratio of loan/interest that gets paid off each month for all lenders? And does that ratio stay the same for the duration?

Thanks again.

I created the 1st version many years ago and compared with Nationwide's figures at the time. In theory any lender that calculates interest daily should have the same figures.

Could you send me a copy too please Mudshark - m(dot)danford@mixd.co.uk

Many thanks.

Yes please Mudshark! ewan at ewanpanter dot co dot uk

Thanks!

http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator is really good.

Handily it can back-calculate your current interest rate from your monthly repayment, which is good when your provider doesn't state it on your mortgage account (Oi, Standard Life, sort it out!)

what is this mortgage thing you speak of?

[img] [/img]

Sorry to divert the thread a little, but on a similar subject: Is it generally possible to transfer one's existing mortgage (i.e. low SVR, 21 years remaining) with the same lender on to a different property? Or does it just depend on the lender and the mortgage? If so, would they be likely to allow me to borrow more? Or would I be more likely to have to get a whole new product when I move?

Mudshark, could you send me a copy of the spreadsheet too please, to track(AT)numbertwenty.plus.com.

Currently got a very low interest rate (more by accident than design) and overpaying my mortgage, so would be interested to find out how this affects the term I will be paying this over. Hopefully your spreadsheet can help with this.

To understand how the interest/capital thing works (as in the OP's 1st question) google "rule of 78". It all becomes clear...

would be interested to find out how this affects the term I will be paying this over

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

wooobob - yes as long as the new property passes the mortgage company's survey and the LTV is OK.

Cheers cheers_drive 🙂

I just seem to remember being told that the lenders like to rake back most of the interest in the early days. I must have not quite grasped that properly.

Interest is worked out monthly or daily or something. However your payments stay the same through out the mortgage. As the amount to pay back is large to begin with it appears you are paying more interest to begin with.

You could level this off by paying less later, but the mortgage would take longer to pay off. Or by paying more to begin with, but where do you get the money from ?

Another thing to be said is that even if you only paid the interest each month, in 10 years the £100k in real terms would be less money (assuming we have inflation and your salary also inflates).

Mudshark (or anyone that has been sent it) please can you forward to me! Thanks (email address in profile)

Sorry Mudshark but if you could find time to send it to someone else, address in profile. Many thanks in advance.

scu98rkr that's exactly the part that I originally misunderstood.
I understand now. Thanks all. 🙂

wooobob - yes as long as the new property passes the mortgage company's survey and the LTV is OK.

And your current employment situation is acceptable to the lender at the time too!

I re-mortgaged with the Woolwich on a low fixed deal. Then I needed to move house so found a new house and a buyer for my house. My situation needed re-assessing according to their latest lending criteria. As I was on a 3yr contract not a perm contract they decided they wouldn't lend to me anymore under new criteria - despite my history and always being on fixed term contracts. So I had to pay them £1500 in early repayment charges and went to another lender and got a marginally better interest rate (not enough to make up for the £1500 mind).

So no new bike for a while.

Cheers Mudshark.

Looks like I will pay off my mortgage about 5 years early if interest rates stay where they are (unlikely I know).

Hi Mudshark, Another here for copy of spreadsheet please - currently going through the pain of trying to sort out a re-mortgage, current deal is endding and they are not offering future ones : (

Looks like I will pay off my mortgage about 5 years early if interest rates stay where they are (unlikely I know).

They might be the way things are going

Edit: Please ignore

wooobob - do check with your lender. If you are on a great deal, ie one they would not/could not replicate today then they will quite likely try and get you to take out a new loan at better terms to them than allowing you to transfer.

To everyone talking about "deals", the world has changed, all the measures being put in place to "prevent this happening again" are making it much more expensive for banks to lend and these extra costs have to be passed on.

I am in banking although not personal finance.

Another request for the spreadsheet please! If I manage to work out how to get my web hosting up and running this afternoon, I can upload it and stick a link to it. It outfoxed me last week though...

Another request please if someone could forward it to the address in my profile.

Thanks

Spooky - I see I sent that to you in 2008!

really?! Starts hunting!

Edit: Thanks for the second copy anyway :p

Could I get the spreadsheet too please, this stuff bamboozles me. Thanks.

Related question, if you are in a fixed rate period can you keep it if you move house or do you have to pay it off (inc redemption fee) and get a new one?

Another copy of the spreadsheet to s9352637@yahoo.com please.

I got my yearly statement yesterday and it appears that my overpayments (which they claim are coming off the capital - the amount I originally borrowed right?) are being applied to the total amount I owe.

Fella on the phone said my mortgage will finish early because I'm paying more in and it was nothing to do with reduced interest because I owe less.

It also appears that the inteste rate is wrong too - I should 0.95% above the ECB rate and they have it at 3.25%

could I have a copy also please, I can host it if you want dont mind it being made available?

harper_stu@yahoo.co.uk

We went onto 5.78% interest, fixed for 5 years in 2007 🙁

[b]mudshark[/b]: can I suggest you just put the spreadsheet on Google Docs, save mailing it out to everybody.

I tried uploading to Google Docs but the graph didn't work for some reason, that's not very important though I suppose.

Saccades, you need to ask the lender some questions, some mortgages apply any overpayments only once a year, others apply them the following month (much better for you that way). You should ask for clarification on the interest rate, there are a number of different ways of calculating it. Making extra payments on your mortgage and keeping your monthly payment the same can really help to shorten the time to paying it off.

mudshark - how about posting some simple numbers, eg % of a 25 year repayment mortgage outstanding at 5, 10, 15 and 20 years for an assumed interest rate.

[code]
Loan £100.00 ('000)
Int Rate 4.00 %
Term 25 years

Capital Paid Off By Year
%
Yr Paid off PA Cum
- - - -
1 2,377.31 2.38 2.38
2 4,851.48 2.47 4.85
3 7,426.45 2.57 7.43
4 10,106.32 2.68 10.11
5 12,895.38 2.79 12.90
6 15,798.07 2.90 15.80
7 18,819.02 3.02 18.82
8 21,963.05 3.14 21.96
9 25,235.17 3.27 25.24
10 28,640.60 3.41 28.64
11 32,184.78 3.54 32.18
12 35,873.35 3.69 35.87
13 39,712.19 3.84 39.71
14 43,707.44 4.00 43.71
15 47,865.46 4.16 47.87
16 52,192.89 4.33 52.19
17 56,696.62 4.50 56.70
18 61,383.84 4.69 61.38
19 66,262.02 4.88 66.26
20 71,338.95 5.08 71.34
21 76,622.72 5.28 76.62
22 82,121.76 5.50 82.12
23 87,844.84 5.72 87.84
24 93,801.09 5.96 93.80
25 100,000.00 6.20 100.00
[/code]

how about posting some simple numbers, eg % of a 25 year repayment mortgage outstanding at 5, 10, 15 and 20 years for an assumed interest rate.

Just use the MoneySavingExpert calculator:
> http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator
/p>

Here's an example:
On £250,000 over 25 years at 4.9%:
[code]
[u]Year[/u] [u]Normal[/u] [u]Overpay £250[/u]
Year Normal Overpay £250
0 250,000 250,000
1 244,845 241,763
2 239,427 233,104
3 233,731 224,002
4 227,744 214,435
5 221,450 204,378
6 214,835 193,807
7 207,881 182,695
8 200,572 171,014
9 192,888 158,735
10 184,811 145,829
11 176,321 132,262
12 167,397 118,001
13 158,016 103,010
14 148,155 87,253
15 137,790 70,689
16 126,894 53,278
17 115,441 34,976
18 103,402 15,738
19 90,747 0
20 77,445 0
21 63,462 0
22 48,763 0
23 33,313 0
24 17,072 0
25 0 0
[/code]

Overpaying would save you £52,693 in interest, and mean you pay it off in full 6 years and 3 months earlier.

Edit: mudshark you've broke the forum with you're cleverness 😕

Forum fixed: hurrah for ninja mods! 😀

You're welcome - misuse of markup helpers the culprit. If you want to post unformatted stuff like code or financial tables use

[code][code] Preformatted text [/code][/code]

Cheers patrick. Though sadly the code tags don't preserve spaces, so it all ends up screwed up anyway 😀

Am I too late to jump on the bandwagon?

Any chance of emailing the spreadsheet over to me at cragseds@yahoo.co.uk please?

ta

We went onto 5.78% interest, fixed for 5 years in 2007

Likewise, only I got a bargain 5.98% 🙁

I can't wait till 31/10/12.

Ahh! You want space - you need pre

eg
[pre]loads of spaces here[/pre]

Ah cheers patrick.

[pre][u]Year[/u] [u]Normal[/u] [u]Overpay £250[/u]
0 250,000 250,000
1 244,845 241,763
2 239,427 233,104
3 233,731 224,002
4 227,744 214,435
5 221,450 204,378
6 214,835 193,807
7 207,881 182,695
8 200,572 171,014
9 192,888 158,735
10 184,811 145,829
11 176,321 132,262
12 167,397 118,001
13 158,016 103,010
14 148,155 87,253
15 137,790 70,689
16 126,894 53,278
17 115,441 34,976
18 103,402 15,738
19 90,747 0
20 77,445 0
21 63,462 0
22 48,763 0
23 33,313 0
24 17,072 0
25 0 0[/pre]

You're welcome Graham

"Likewise, only I got a bargain 5.98% "

I moved to a lifetime tracker at Base rate plus 0.48% one month before the rates started to tumble. Been on 0.98% for well over two years now.

The fixed rate i wanted ran out before i sorted it so i went for a tracker as a short term fix. Best financial decision of my life and it was all down to pure luck and nothing else. Saved me around £20k already.

Now it looks like the bank rates should be less than 1% for several years to come. Long may it continue (although i do have some sympathy for the savers out there earning nowt).

Saved me around £20k already.

Nice! Hopefully you've continued to pay as if you were still at 5% and saved yourself lots more?

Got luckly with my tracker at .17% above BOE rate. I recon I will pay it off more that 10 years early

Hi Mudshark, your prob fed up with this by now, but any chance of your spreadsheet? Thanks in advance mansinATgmailDOTcom