Please help me understand my interest only mortgage statement.

[LauristonLane]

Panicked by a half explained call from the BS...how much do I still owe?

Statement shows
Interest only mortgage with 5 years 2 months left.
Closing balance £15,157.00

Overpayment Reserve £19,603.00

Payments are around £30.00 per month, my direct debit actually pays £200.00 per month.

I can't remember what I borrowed but know that 'interest only' means no capital is repaid.

My question is what do I owe the BS in 5 years time - the original amount ( that I can't remember and isn't listed on my statement) or £15,157.00.

Thanks!

You'll owe the amount you borrowed in the first place. You pay interest on this amount over the term of the loan with the full amount repayable at the end.
I'm unsure why you've overpaying?

You seriously can't remember the original loan value??

Presumably you have only paid the interest. Seems like £30 per month would be very low for interest. Was it always this amount?

The overpayment could be used towards paying of the original amount borrowed.

Can you download the app for your mortgage company. There may be more information there. If not phone them tomorrow.

If your balance is £15000-odd then that's what you will owe. But your overpayment fund seems to be £19000 so surely you've paid more than enough already. I would ring the bank!

You had better phone the lender!

But in effect what you have created is not an interest-only mortgage. Each month you only owe them interest, which you have said is £30, but by massively overpaying (£200) you are paying off large chunks of the capital. It looks like the original loan was for a little bit short of £35,000. Over the years you have overpaid a built-up the reserve of £19,000. And you now owe them £15000. But the bank will know a lot better than some random unqualified stranger off the internet!

It’s not really clear from your post but you will owe whatever you borrowed in the first place.

It’s perfectly possible to overpay an io mortgage, which the op appears to be doing.

Ring and speak to someone OP.

If it's an interest-only mortagage, you are only paying off the interest owed on the sum you borrowed.

I have an interest-only mortgage, and if I overpay, the payments go to reduce the continuing monthly payments, they don't reduce the capital I owe. (I did query this, and apparently it's 'what people want', and couldn't be changed, so I save what I would be overpaying into a separate savings account). This means it's impossible to tell from your payments what your original sum that you borrowed was - the overpayments are reducing the monthly payment.

You should also be contributing to another fund/savings account/other financial vehicle which will pay off the capital at the end of the mortgage term, otherwise you will still owe it when the mortgage ends.

Why did they phone you? From your statement it looks like you owe £15k, but have £19k in a reserve account. So why haven't you paid it off completely? Or do you intend to borrow from the reserve?

My guess would be that you borrowed the 15 plus the 19. (Rough)

If you carry on with overpaying by £170 a month for 62 payments you’ll be 5K (rough) short at the end of the mortgage term.

I've attached the statement for clarity!

£15k is what you owe now over and above the £19k is you have paid on top of the interest.

So at your current rate of £200 you are paying off just over £2k per year.

You need to be paying about £250 per month to have an overpayment big enough to not owe anything at the end of the term.

Looks like you borrowed about £35k originally.

Looking at it I agree now with random. You owe £15k. The £19k overpayment has already come off the total left to repay. So your £200 should just about cover it.

Ok maybe not quite - can you up the payments a bit?

The £15k is the total you still owe.
Your overpayments are repaying the capital.

You’ll owe them £15k. If you’ve got 5 years left to pay, and can increase your payments to £250 a month, you’ll have paid it all off. Or pay £300 a month and it’ll be paid off in approx 4 years.

Great, the £15,000 isn't an issue and can be paid off ASAP.

I was worried that I still had a bigger amount (£35,000) to pay in 5 years that I hadn't accounted for.
This was made more complicated by two mortgages on this same property, one transferred from my previous house and then this one, taken out when suddenly as a single parent I needed to cheaply raise more money to buy a house for just me and the DC's.
The 'other' mortgage is paid off.

I'm supposed to be educated - I'm rubbish at 'money' - not in terms of any debts, just understanding what I'm supposed to do! 😊

Thanks all I can sleep better tonight before calling the BS.

In February 2026 you need to repay £15,157 assuming you only make interest payments between now and that date.

You should ask them whether they can reduce the outstanding balance by the amount you have overpaid as right now you may be paying more interest than you need.

Thank you @WorkingItOutAsIGo - I will do that.

Looking at that statement I'm sure they are already offsetting the overpayment against the capital owed.

The difference is that I think the OP could draw back down this overpayment and still owe the full original amount.

The amount of interest added/paid in 2020 is around 2% of £16k rather than 2% of £35k

You've already paid off a big chunk of the £35k. This has gone down due to you paying the interest, plus chunks off the capital.

At the beginning of 2020, you owed just over £17k. The interest is added to this and if you only paid the interest, you'd still owe £17k at the end of the year, but you've paid £200 pm during 2020, so each month the balance has reduced by about £170 and at the end of the year, you owed about £15k.

You owe the £15K sum. The overpayments of £19K have already been accounted for - it tells you in the right hand notes column.

So the £15K is outstanding to be repaid within 5 years.