Mortgage Interest Payable

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If someone had a mortgage of say €105,000 over 25 years, paid it for 2 years and then went for a top up of €50,000 plus extended their original mortgage back to 25 years (lets just say they had €100,000 remaining- would they be in the same position as if they re-mortgaged for €150,000?

What I am wondering about is if they get any credit for the first 2 years years or are they really written off - even though they would have made a lot of "interest heavy" repayments. Are they going back to the same "interest heavy" first couple of years?

I can't seem to get htis right in my head ... please help.

 

[oysterman]

Of course they're getting credit for the first two years. They now have a €150k mortgage for 25 years but have in fact borrowed/received €155k. They have paid off the €5k across the first two years while having had the benefit of another €100k of credit across that period.

Don't look on the first two years as "interest heavy". Rather think of it as the stage when you have possession/the use of the biggest chunk of the lender's money. The initial years of a mortgage is the period when you are gaining most from the mortgage.

Don't let it bother you that you're not making great inroads into the loan at that stage. That'll happen at the time when you're gaining the least from the loan i.e. when you have the use of only a small amount of their money.