Interest rates gone down but my repayment has gone up - why?

[malgoode]

I thought I was good at maths but can anyone explain this to me?

 

 

I have just 1 year and 4 months left on my mortgage.

The mortgage rate has just reduced by 0.25% thus my mortgage rate has also reduced fro 3.75% to 3.50%.

 

 

My repayments were £357.62 a month but have INCREASED to £378.10.

That about 6% INCREASE per month.

 

 

The mortgage company put a note with their letter saying the increase is because I am near the end of the mortgage term but I really do not understand that.

 

 

If the rate has gone down surely the repayments should go down too.

Can anyone explain this to me please? #confused.

[Andyorch]

It will be an adjustment as the end of the term is nearing to pay the balance outstanding.....a lot can change over 25 years.I assume there are no arrears or admin charges ever been applied over the term?

 

Regards

 

Andy

[malgoode]

No arrears or other charges, always paid on time in full. Just eagerly waiting for the 16 months to pass!

[malgoode]

Plus I paid it over 15 years with a big deposit

[Andyorch]

Well their calculations must be slightly out over the 15 years...when you are nearing the end they simply look at the balance and divide by the number of payments remaining...nothing really do do with interest rates once you are on the home straight.

 

Ring them and and ask if your still not happy.

 

Andy

[aesmith]

If they provide a statement you should be able to verify that the amount of interest is correct, and that the additional amount that you're paying over and above that interest is being deducted from the balance.