How to read your annual mortgage statement
Start with four figures: the opening balance, the interest charged, the payments received and the closing balance. The opening balance plus interest and any fees, minus payments, should equal the closing balance. If it does, the statement agrees with itself, and it is the figure every estimate should be checked against.
The figures that matter
- Opening balance — what was owed at the start of the statement period.
- Interest charged — the total added over the period.
- Payments received — contractual payments and overpayments, sometimes listed separately.
- Fees and charges — anything added to the balance, such as an administration fee.
- Closing balance — what is owed at the end of the period.
- Rate and payment — the rate in force, the monthly payment, and the date either changed.
- Remaining term — how long is left if payments carry on as they are.
Checking it adds up
Opening balance + interest + fees − payments = closing balance. With an opening balance of £180,000, interest of £8,600, no fees and £14,000 of payments, the closing balance should read £174,600.
If the payments line is short of what you paid, check the dates: a payment made at the end of the period can be received in the next one.
Why it may not match an estimate
- The interest method. Daily interest varies with the length of each month — see how mortgage interest is calculated.
- Payment dates. The day a payment is received decides which month's interest it reduces.
- A rate change part way through. The new rate changes the interest for the rest of the period.
- How overpayments were applied. Whether they reduced the term or the payment.
What to note down each year
- The closing balance and the date it was taken.
- The rate, and the date it is due to change.
- Any overpayment allowance left, where the statement shows it.
- The date any early repayment charge ends.
In Mortgage Meadow you can start from the balance on your latest statement rather than from the day the mortgage began, so the projection runs from a figure your lender has confirmed.
Questions people ask
Why is the interest on my mortgage different each month?
Commonly because interest is worked out daily, so a 31-day month carries more than a 28-day one. A rate change or an overpayment part way through the period will also change it.
Where do I find my overpayment allowance?
In your mortgage offer, in the section on early repayment. Some annual statements also show how much of the year's allowance is left, and your lender can confirm it.