Mortgage interest payment correct?

[snico4]

HI, I switched my mortage to an interest only about 6 months back due to my partner losing her job.

 

I am wondering if the actual payments I am making are correct.

 

The balance of my mortgage is now £87'000 with a term of 20 years left

 

I recieved a letter a few months back saying my new interest payments will now be £262.42

 

The letter says;

 

The new rate of interest will be 3.600% based on 90 day Libor of 2.10000 plus the margin applicable to your mortgage account. This rate will apply from the 1st March 2009 until the next quarterly reset date.

 

Your new minimum montly payment from 1st April 2009 is £262.42

 

As the interest rates are low we are now looking at switching back to the SVR as my partner is now back working.

 

The ammount I am paying at the moment just seems quite high for an interst only at todays rate. I have used online mortgage calculators to se what I should be paying but it all seems a little confusing

 

Any information or help is much appreciated

 

Steve

[mercyblue]

Well the current libor rate is 1.28% which would mean that when your mortgage gets reset today by the looks of it in fact you will be down at 2.78% which is likely to be lower than the svr.

[zander]

HI, I switched my mortage to an interest only about 6 months back due to my partner losing her job.

 

I am wondering if the actual payments I am making are correct.

 

The balance of my mortgage is now £87'000 with a term of 20 years left

 

I recieved a letter a few months back saying my new interest payments will now be £262.42

 

The letter says;

 

The new rate of interest will be 3.600% based on 90 day Libor of 2.10000 plus the margin applicable to your mortgage account. This rate will apply from the 1st March 2009 until the next quarterly reset date.

 

Your new minimum montly payment from 1st April 2009 is £262.42

 

As the interest rates are low we are now looking at switching back to the SVR as my partner is now back working.

 

The ammount I am paying at the moment just seems quite high for an interst only at todays rate. I have used online mortgage calculators to se what I should be paying but it all seems a little confusing

 

Any information or help is much appreciated

 

Steve

 

87,000 (mortgage balance) x 3.6% divided by 12 = monthly payment. Your percentage above libor looks good just now considering the best tracker rates are 2.79% above base rate = 3.29%. Also depends who your lender is as their base rate could be higher than your libor +.

[mercyblue]

100.000 works out at about £86 per 1 percent so would seem yours are correct on any mortgage the majority is interest even when on a repayment mortgage.

[Suetonius]

HI, I switched my mortage to an interest only about 6 months back due to my partner losing her job.

 

I am wondering if the actual payments I am making are correct.

 

The balance of my mortgage is now £87'000 with a term of 20 years left

 

I recieved a letter a few months back saying my new interest payments will now be £262.42

 

The letter says;

 

The new rate of interest will be 3.600% based on 90 day Libor of 2.10000 plus the margin applicable to your mortgage account. This rate will apply from the 1st March 2009 until the next quarterly reset date.

 

Your new minimum montly payment from 1st April 2009 is £262.42

 

 

As the interest rates are low we are now looking at switching back to the SVR as my partner is now back working.

 

The ammount I am paying at the moment just seems quite high for an interst only at todays rate. I have used online mortgage calculators to se what I should be paying but it all seems a little confusing

 

Any information or help is much appreciated

 

Steve

 

The monthly repayment figure would vary dependent upon if your interest was calculated daily, monthly or annually.

 

Based on interest being calculated annually,

 

With a balance of £87,000 @ 3.6% = £3,132 (interest per year)

£3,132 / 12 = £261

 

Monthly Interest £261.00

 

However, the difference could be explained by the period covered by your lenders mortgage year, as not all lenders work January - December

[snico4]

Thanks for the replies, finally got my head around it now.

 

Steve