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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How do you figure that the interest is “much more than 5.64%”?
Interest is calculated based on how much you owe on the loan, which is usually a very large number. 5.64% of a very large number is still a lot of money.
Lets Ignore all the nuances of exactly how the interest and your rate are calculated and do some ‘back of the envelope’ style math. What was your remaining principle like? 160,000-ish?
5.64% of 160,000 is about 9000. That’s about how much interest your loan accumulates every year. divide that by 12 months gets you 750 in interest every month.
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