Very confused over my mortgage term/rate

Nomansland

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Hi,
I purchased a house as a first time buyer in May 2003 and the starting principale on my mortgage was 165600 euros. I started paying my mortgage in June 2003 on a 1 year special fixed rate of 2.95% on a 35 year term. My monthly repayments were 634 euros. When this was up on June 2004 I wnet on to a variable rate of 3.3%. At the same time I requested that my term be reduced to 30 years. I was advised by the bank and independently that I would be better off to keep the term at 35 years and instead to over pay a monthly amount that would be equivalent having a 30 year mortgage. This, I was told would keep my monthly TRS on the interest the same. Now my monthly repayments were 717 euro's per week. When the ECB announced before xmas of a probable hike in rates I looked to fix it straight away to 3 year fixed at 3.49% and I also wanted to reduce the term to 23 years (even though I was ofically on a 35 year term I was paying the equivalent of a 30 year term). The mortgage center told me to get the interest rate fixed ASAP and to worry about the term later, that this could be changed at any time. I have just been in with the bank with a view to getting the term reduced and I also had some questions for them. They were about as useful as tits on a bull!!!!!!!!
I have come away totally confused. When I was on the variable rate I knew I was overpaying monthly to the tune of knocking 5 years of the term of the mortgage. I knew the 63 euros a month I was paying extra was coming straight off the principal. My total monthly payments were 717 euros. Now since I fixed the mortgage at 3.49% I am still paying 717 a month ofically on a 35 year term. How are they coming up with this number?? I cannot work it out. Also is it possible that sme of my monthly payment is going in as an overpayment and therefore am I getting crucified on interest? Also if I want to reduce the term of the mortgage am I foing to get penalised here because I'm on a fixed rate? The bank previously assured me not but to be quiet honest the crowd I'm dealing with don't know their arses from their elbows.
 
Re: Very confused over my mortgage term/rate!!!

sorry,
I have found out that the current maturity date on my mortgage is August 2036. After doing some research on the internet mortgage calculator I think I have figured out what is happening. Previously I was paying 717 a month, 654 of this was been payed on a 35 year term at 3.3%. There was 63 euro overpayment a month which was coming directly off the princapal and knocking 5 years of the life of the mortgage. At that rete of repayment my maturity date would have been Feburary 2034.
When I requested to go fixed on 3.49 % my repayments stayed exactly at 717 a month. So it looks to me like they have kept me ofically on the 35 year term (confirmed this) paying 654 a month at 3.49 % and 63 euro monthly prepayment exactly as before. Because I am paying the same monthly amount on a higher interest rate my maturity date is now pushed out by 2.5 years. All fair enough one might think. However according to the mortgage calculator on the internet, which is a variable rate calculator, taking the above numbers into account my new maturity date should be May 2005, so therefore because I am overpaying monthly into a fixed interest mortgage I am paying a penalty equivalent of over a year extra onto my mortgage.
Does all this sound correct to you guys??? I have tried explaining this to the girl in the bank but I might as well be talking to my right hand.
 
Re: Very confused over my mortgage term/rate!!!

It does seem odd. How much did you fix. Was it the balance outstanding (165,600 less principal repayments to date less overpayments to date)?
The mortgage company may create a credit for possible future non payments.

One explanation is that the additional amount paid off each month now that it is fixed is sitting as a credit against future non payment. As it is fixed there may not be anything you can do about it. When the fixed period ends make sure that the credit and all future overpayments are set off against the principal.
 
Re: Very confused over my mortgage term/rate!!!

With fixed loans you used to pay a fee (Settlement?)
which acted like a penalty to compensate banks for the interest lost when a fixed loan was payed back early.
This didnt apply with variable loans -
Not100% if this still applies - I would have seen this about 5 years ago
but in the same vein payments could not be changed to fixed ssias but could to variable rate ssias.
 
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