Mortgage repayment + interest

JANUARY30

Hi,

We took out a mortgage in and our first interest payment of €385 came out before the mortgage payment in March. Today again our interest payment has come out before the mortgage payment but this time it was €420. We are on a 4 year fixed interest rate so I'm not sure why it has changed? Our mortgage balance itself is now MORE than the actual mortgage amount? Our mortgage payment is 791 per month. Basically after 2 mortgage payments we will actually only have paid off about €200 of our mortgage. Does this sound correct? I hope this makes sense.

phormium

Interest isn't the same every month because there are different numbers of days in the months.

As to whether the interest is right or not, multiply your balance by the rate being charged, divide by 365 and multiply by number of days in relevant month.

How though would you have only paid off 200 after two payments if interest is approx 400 and payments nearly 800?

Lets say you started with 100,000 for arguments sake 385 was added on beginning of March so now 100,385, payment of 791 comes off it mid March so now 99,594.

Interest of 420 is added on beginning of April so now 100,014 (this is higher than original but because April payment has not been applied yet), payment of 791 comes off mid April so now 99,223

This doesn't take into account anything else that might be paid from the repayment such as insurances, if so these will affect the balance too as not all the surplus of the payment after interest will be going to the capital balance.

vandriver

phormium wrote: »

Interest isn't the same every month because there are different numbers of days in the months.

As to whether the interest is right or not, multiply your balance by the rate being charged, divide by 365 and multiply by number of days in relevant month.

This will only give an approximation.

phormium

It will be pretty accurate enough particularly on a brand new mortgage for purpose of checking first few months with very little capital reduction.