I dont understand mortgages

Former Member

Ive been looking at banks websites but i still am confused about mortages, what does interest only mean?

How do you calculate the total to repay?

If the rate of a mortgage is 4.37% and i borrowed 150k, how to i calculate the total i repay?

Thanks

Former Member

Lots of thins to take into consideration of course, but a basi repayment mrotgage, capitla and ineterest would be

£150,000 @ 4.73% over 25 years is £863 per month, £10,356 per year.

Total repayment £258,900.

(i've rounded off pence, but that's pretty good idea of the sums)

Interest only, as i understand it is, you just pay the interest on the loan. You then set up an endowment/pension policy which you pay into and , hopefully, after the end of the term (25 years say) you've accumulated enough money to pay off the original mortgage.

The interest only repayment for the above is £591 per month

Former Member

RubberSkin wrote: »

Lots of thins to take into consideration of course, but a basi repayment mrotgage, capitla and ineterest would be

£150,000 @ 4.73% over 25 years is £863 per month, £10,356 per year.

Total repayment £258,900.

(i've rounded off pence, but that's pretty good idea of the sums)

Interest only, as i understand it is, you just pay the interest on the loan. You then set up an endowment/pension policy which you pay into and , hopefully, after the end of the term (25 years say) you've accumulated enough money to pay off the original mortgage.

The interest only repayment for the above is £591 per month

Thanks very much for explaining that, i think interest only is a bad idea, as if we pay just the interest instead of the full amount, the differance that will be saved over the 25 years i calculated to be £81600 which falls short by £70k

To be honest im not sure what an endowqment policy is but it does seem risky, id rather pay the fixed amount and know the house is mine after 25 years, i think thats a good deal, its horrible thinking you have to lose over 100k but its better that renting for about the same amount. Just gotta get that deposit...:thumb:

Former Member

Endowment, as i understand it, is like a bit like having savings account. You put money in every month and it accrues interest from your money being used on the stock market then the interest accrues interest and so on and so on. That's a pretty simple explanation, so i can understand it My parents had an endowment and when it matured they paid off the mortgage and had £45,000 left over, which was theirs.

Endowment also means how big your cock is

Former Member

Just to add, if you paid in the difference per month (£272) £272 per month with an interest rate of 5% will give you £160,000 in 25 years time. SO that'd pay off the original mortgage and give you £10,000 which by 2035 will probably be enough for fish and chips for 2 and a can of Fanta

Former Member

RubberSkin wrote: »

Endowment also means how big your cock is

Hmm, does that mean it can go up or down, ultimately getting smaller as i get older haha :d

Seriously that is great for your parents that really paid off nicely for them, there must a be a risk of not making a nice return on it if the shares dont do well though right?

RubberSkin wrote: »

Just to add, if you paid in the difference per month (£272) £272 per month with an interest rate of 5% will give you £160,000 in 25 years time. SO that'd pay off the original mortgage and give you £10,000 which by 2035 will probably be enough for fish and chips for 2 and a can of Fanta

VERY GOOD POINT...

Former Member

Yeah there is a risk. My parents paid off thier mortgage about 1997, so they were a bit fortunate on their fund in the boom and bust days of the 80s early 90s. Currently, i would of thought, endowment mortgages don't look all that good because of the poor interest rate

Former Member

Hey there,

It seems like you have managed to obtain some answers already from the other users, which is great. Especially liked Rubberskin's explanation;

Lots of thins to take into consideration of course, but a basi repayment mrotgage, capitla and ineterest would be

£150,000 @ 4.73% over 25 years is £863 per month, £10,356 per year.

Total repayment £258,900.

(i've rounded off pence, but that's pretty good idea of the sums)

:yes:

I just wanted to direct you to other sources of information. The Money Made Clear website has a Mortgage section with lots of advice.
They also have a Mortgage Calculator which could help you understand all the mortgages out there and the financial implications of each.

Hope this helps.

Former Member

Bear in mind that interest rates, while they might be fixed for, say, two years, after that revert to variable such as Base Rate + 3%. Given rates are likely to go up in 9-12 months this should also be factored in, as a rise will obviously make your monthly payments more expensive.