Hi all,

I've just received my annual mortgage statement and its left me some what baffled. I will try to explain as simply as I can. About 18 months ago we remortgaged to a company but due to our credit problems we couldn't get a main stream lender but thats not really the issue. We have a repayment mortgage and we pay £540.89 a month and have missed no payments. When we were with Abbey we paid £601.86 a month and their statement suggested what I already knew. It calulated the interest which was £435.90, then the capital which was £165.96 we then paid £601.86 and they credited our account. So we were paying off our mortgage.

But our new mortgage company have taken our payment on the 1st of the month of £540.89 and then on the 31st of the month charged us interested of £491.85 (variable). I pay be really thick but it means over the last year we've been paying £50.38 towards the capital, it might as well be an interest only mortgage! Surely they should be taking the £491.85 off our outstanding balance like Abbey did not adding to it. It means we would never re pay our mortgage. Basically we've paid £638.82 off our mortgage in the last year when I was expecting it to say nearer £6k.

Is this correct? Surely they added the interest to the original loan so they shouldn't still be adding it on top of our payments. This product was actually recommended by a mortgage broker so I'm slightly confused.

Please can someone explain this to me!

Thanks

Gemma