P
pats22
Guest
Hi
I’m sure this will sound like a silly question to most of you but I’m looking for some clarity on an issue re fixed rates and couldn’t get a satisfactory answer out of a bank representative on the phone.
I’m currently looking to fix my mortgage and I was of the perception that you fixed the interest rate – but got the impression off of the person on the phone that it was the repayment figure that was fixed.
So for example if I thought that if I owed
100K at 5% id be paying back the relevant principal amount + 5k in year 1
In year 2 I’d have paid off some of the 100k principal figure so my principal would be reduced to say 90k and I’d pay off some of this and be charged 5% interest on the balance on so on for the remainder of the fixed period – i.e. fixed interest rate on reducing balance hence falling repayments
On the phone I got the impression that the payment figure was fixed for the 5 years. So in the example above in year 1 id be paying 15k
In year 2 another 15k and so on – i.e fixed repayments every month
What I wanted an answer to is if the payment figure is fixed as in scenario 2 is a greater percentage of the payment going to pay off the principal in year 5 compared to year 1 or have I no understanding of how fixed rate repayments work or did I just get totally confused on the phone?
Hope this makes sense
Cheers
p
I’m sure this will sound like a silly question to most of you but I’m looking for some clarity on an issue re fixed rates and couldn’t get a satisfactory answer out of a bank representative on the phone.
I’m currently looking to fix my mortgage and I was of the perception that you fixed the interest rate – but got the impression off of the person on the phone that it was the repayment figure that was fixed.
So for example if I thought that if I owed
100K at 5% id be paying back the relevant principal amount + 5k in year 1
In year 2 I’d have paid off some of the 100k principal figure so my principal would be reduced to say 90k and I’d pay off some of this and be charged 5% interest on the balance on so on for the remainder of the fixed period – i.e. fixed interest rate on reducing balance hence falling repayments
On the phone I got the impression that the payment figure was fixed for the 5 years. So in the example above in year 1 id be paying 15k
In year 2 another 15k and so on – i.e fixed repayments every month
What I wanted an answer to is if the payment figure is fixed as in scenario 2 is a greater percentage of the payment going to pay off the principal in year 5 compared to year 1 or have I no understanding of how fixed rate repayments work or did I just get totally confused on the phone?
Hope this makes sense
Cheers
p