This has me stumped all day. The rates have dropped 0.5%, therefore on a €100,000 mortgage, the saving would be as follows (€100,000 x 0.5% = €500pa, divided by 12 months = €42 per month).
However various financial commentators today have said that the drop of 0.5% would result in a monthly decrease of €26 per month.
I've run both figures through a mortgage calculator and they are both spot on.
So my questions are - why do you get a bigger saving on an interest only mortgage, and where does the extra €16pm go on a repayment mortgage? It can't go off the capital as the loan is still repaid in the same term.
However various financial commentators today have said that the drop of 0.5% would result in a monthly decrease of €26 per month.
I've run both figures through a mortgage calculator and they are both spot on.
So my questions are - why do you get a bigger saving on an interest only mortgage, and where does the extra €16pm go on a repayment mortgage? It can't go off the capital as the loan is still repaid in the same term.