Interest repayments on Annuity Mortgage??

S

sadmak

Guest
I have received my mortgage statement and got the annual shock of seeing that last years mtg repayments on my annuity mortgage are hardly touching the principal and are mainly paying of interest.
I have been told that after 5 years then the repayments start making real inroads on the Principal. But that the first 5 years is mainly interest.

How is this higher interest calculated?

If I switch mortgage lender to avail of a lower rate then will i start a new 5 year period of paying mostly interest?
 
Have a look at
Karl's Mortgage Calculator
Type in your mortgage amount and have a look at the amortisation table.

Your annual horror is because the sum owed is at a peak across the first few years of a mortgage but, once the sum starts to get paid down, a much greater proportion of your monthly payment starts going towards paying down the original sum borrowed.

In the last few years of a mortgage there is hardly any interest and the sum owed plummets.
 
Back
Top