Fixed rate mortgage different amount of interest each month

[BloodyWorried]

Hi, I have a fixed rate mortgage and have received a statement where the amount of interest charged varies month on month (ie between £360 and £417), not always increasing but somewhere between the two values listed. I thought it was by days in the month but it isn’t. Should it vary month on month? Is there a way of working it out (can’t find anything out extra online and won’t get a chance to call with work shifts for a little while). TIA.

It'll be a combination of days of the month plus the fact that you're paying some of the capital off each month (which reduces the daily interest).

For example, if in month A (31 days) you owe £50,000 @ 5% interest you'll owe £212 in interest (£50,000 5% interest 31 days in the month / 365 days in a year). Say you pay £600 per month. The amount you now owe is £50,000 - £600 (total mortgage payment) + £212 (interest charged) = £49,612.

In month B (also 31 days), you'll owe £211 in interest (£49,612 5% interest 31 days in the month / 365 days in a year).

So your daily interest reduces each month that you repay some of the capital (as there's a smaller mortgage to pay interest on), but it will still vary depending on the number of days in a month. Also, assuming that your monthly repayments are the same each month, you'll be paying off more capital in February (28 days) than January (31 days) as there's 3 days less interest to pay off.

My post is assuming that your mortgage charges interest on a daily basis, which most do!