Mortgage

Drexl Spivey

Hi,

I have a KBC mortgage.

Last time I looked at the mortgage repayments, I see that every month, 590 euros out of 966 euros is going to interests. The figure seems to go down every months but that's still 61 percent of the monthly repayment.

- Does anyone know how that makes sense?
- When are we going to reach a point where we pay little/no interests?
- What is the cheaper option long term: lump sum repayment of the balance?

The goal is to repay the house as quickly as possible and pay the least amount of interest (of course)

I save money on a saving account but maybe the way to go is to repay the mortgage (lump sum or increase repayments).

Thanks for the replies.

chris85

Interest paid at the start is higher as the balance on the mortgage is high and this is what the interest is calculated from. It will slowly go down all the time throughout the mortgage. The first year of a mortgage about 90% of a payment is to interest, at the end of the mortgage it flips and aroudn 90% goes on capital balance.

Kenny Logins

Try this - http://www.amortization-calc.com/

Drexl Spivey

So I presume if I pay a lump sum I will reduce the amount of interests and pay less overall.


Am I correct or do they have ways to make you pay anyway?

Kenny Logins

You only pay interest on the balance, so paying a lump sum will reduce the interest, yes.

Other calculators have a function to include lump sum payments, have a Google for one.

sensitive1960

Drexl Spivey wrote: »

So I presume if I pay a lump sum I will reduce the amount of interests and pay less overall.


Am I correct or do they have ways to make you pay anyway?

If you are not on a variable/tracker rate you will pay a penalty if you make a lump sum payment.

chris85

sensitive1960 wrote: »

If you are not on a variable/tracker rate you will pay a penalty if you make a lump sum payment.

Important point OP, if you are on a fixed rate at present there is a penalty for lump sums.

If you pay a lump sum it comes off the principal balance on the mortgage and thus you pay less interest as the interest is calculated off the principal balance.

Drexl Spivey

chris85 wrote: »

Important point OP, if you are on a fixed rate at present there is a penalty for lump sums.

If you pay a lump sum it comes off the principal balance on the mortgage and thus you pay less interest as the interest is calculated off the principal balance.

Thanks a bunch!

No wonder those mortgage companies don't tell you how to optimize repayments: they want you to pay as much interests for as long as possible.
I need to go to KBC offices ASAP and inject money. I was also interested in increasing the monthly repayments.

I sent KBC an email 11 days ago: no answer. Great service when you consider my blood and soul goes to my job which I do to pay them.

chris85

Drexl Spivey wrote: »

Thanks a bunch!

No wonder those mortgage companies don't tell you how to optimize repayments: they want you to pay as much interests for as long as possible.
I need to go to KBC offices ASAP and inject money. I was also interested in increasing the monthly repayments.

I sent KBC an email 11 days ago: no answer. Great service when you consider my blood and soul goes to my job which I do to pay them.

Not really, you got a mortgage agreement for so many years. They are bound by that. They cant start advertising to people to pay more than they are contracted to. People need to make themselves aware of it, cant blame the bank for it.

Pablo Sanchez

Drexl Spivey wrote: »

Thanks a bunch!

No wonder those mortgage companies don't tell you how to optimize repayments: they want you to pay as much interests for as long as possible.
I need to go to KBC offices ASAP and inject money. I was also interested in increasing the monthly repayments.

I sent KBC an email 11 days ago: no answer. Great service when you consider my blood and soul goes to my job which I do to pay them.

I know KBC use a secure email service, check back to see if you received any sort of email from them as it will direct you to an area where you register to receive their secure emails- they are normally pretty swift in responding to mails.

Maybe give them a quick buzz, you can get their bank details and register them as payees on your internet banking- that way if you want to bung in a few extra quid occasionally you can do it without the need for going into the office or sending a draft/cheque.

If you wish to set up a regular overpayment of your mortgage, they will send you out a standardised from for the purpose.

Kat1170

Quick question, don't think I going too far off topic. I have over 10k paid in addition to my normal monthly mortgage payments but it is just sitting there until extra payments match mortgage amount and cancel each other out. Can I ask bank to pay it off my principal amount in order to reduce my monthly repayments.

I'm with PTSB on a normal variable mortgage.

Henry Ford III

Kat1170 wrote: »

Quick question, don't think I going too far off topic. I have over 10k paid in addition to my normal monthly mortgage payments but it is just sitting there until extra payments match mortgage amount and cancel each other out. Can I ask bank to pay it off my principal amount in order to reduce my monthly repayments.

I'm with PTSB on a normal variable mortgage.

You can ask but they're bound by whatever contract is in place.

Drexl Spivey

I injected a lump sum. I was happy.

I just received a letter confirming the new balance. But they reduced the monthly repayment! I never asked them to change the monthly repayment rather I want to bring the pay off date forward.

...oh and they increased the interests rate...

They do all they can to make us pay more!

Pablo Sanchez

Drexl Spivey wrote: »

I injected a lump sum. I was happy.

I just received a letter confirming the new balance. But they reduced the monthly repayment! I never asked them to change the monthly repayment rather I want to bring the pay off date forward.

...oh and they increased the interests rate...

They do all they can to make us pay more!

Simple, just ask then to increase your monthly payment up to what you were paying before.

Drexl Spivey

Pablo Sanchez wrote: »

Simple, just ask then to increase your monthly payment up to what you were paying before.

Thanks Pablo. Yes we have to watch our back and constantly verify that things are done.

So every time I do a payment I have to tell explicitly to increase the monthly repayment to what it was ...

chris85

Drexl Spivey wrote: »

I injected a lump sum. I was happy.

I just received a letter confirming the new balance. But they reduced the monthly repayment! I never asked them to change the monthly repayment rather I want to bring the pay off date forward.

...oh and they increased the interests rate...

They do all they can to make us pay more!

It could be a case that your mortgage contract stipulates that over payments will reduce the monthly payment rather than reduce the term. I would chill out and ask them about this and then blow a gasket if you don't like what they say. If its in the mortgage agreement then they have no option but to reduce the payments.