My monthly mortgage payment is GBP965. Of that, monthly interest varies from GBP714 to GBP770. The annual interest rate 5.64% and the remaining term is just under 27 years, five years fixed.
Clearly the interest is currently much more than 5.64%. What’s the calculation here?
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Lets say your loan is GBP150,000. For a 5.64% interest rate, that means you have to pay GBP8460 interest in the first year. That means your monthly interest payment alone will be about GBP710-770/mo. The remaining amount of your payment goes into principal, which will slowly decrease the amount you owe over 27 years.
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