Interest of monthly mortgage payment

[ChimChimeny]

Hi all,

I'd like to work out how much of the balance of our mortgage will be paid off each year, so I need to know how much of the monthly payment is interest.

If the monthly payment is £500 and interest is 2%, is it as simple as £10 per month is interest and the rest is paying off the balance? I assume not because that seems very low but i'm not sure!

TIA

No, because each month you pay a little off the capital as well as interest. Thé next month the interest is less - you owe less and the amount of capital repaid increases.

You need to know the amount that you have outstanding.

In your example I believe it would it would be 1/12 of 2% of the outstanding balance, not 2% of the monthly payment.

So if you owe £100,000 you’ll be paying about £166 in interest each month

Try this:
https://www.mortgages.ie/go/firsttimebuyers/taxreliefcalculator

Thank you, I thought it seemed too low! I'll have a go on working it out on excel

You might be better off using the MSE mortgage calculator, as I think interest is calculated daily on what you owe and then taken as a 1 month payment. Our bank actually itemizes how much interest we pay on the monthly statement so could check there.

Just use the calculator I linked to

It varies depending on where you are in the mortgage.

At the beginning, it's mostly interest and very little capital, because you owe a lot. It could literally be £10 capital and £490 interest in your example.

At the end, it tends towards the other way around, because you don't owe very much, so a £500 payment could be £10 interest and £490 capital.

If you're in the middle, it will be somewhere between the two examples above. There are calculators online that will show a graph of the above, if you details such as time and amount remaining, and interest rate.

@titchy the link didn't work I'm afraid

Try this

https://www.mortgages.ie/go/firsttimeebuyers/taxrelieffcalculator

Try this calculator:
www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/