I've been offered a mortgage for 75,000 for a term of 12 yrs. The interest rate is fixed for 2 yrs at 1.89% and after the 2 yrs, the interest goes up to 3.6% for 10 yrs. But when I remortgage at the end of the 2 yrs, will I still be paying (old lender) the amount that was originally forecast ie 1.89% for 2 yrs + 3.6% for 10 yrs?
ie current offer says when I borrow 75,000 for 12 yrs I will be paying back 94,000 altogether. So, after 2 yrs (when fixed term ends and 10 yrs is left) when I borrow from a new lender and pay this loan, will I still be paying them the 94,000?
The figures above are not accurate; roughly what was in the offer.
I now have more information to substantiate the correct answers by @Hart CO and @D Stanley. I have seen the mortgage illustration (also called the amortization schedule) which clearly demonstrates that the interest I pay for the first 2 yrs is only 1.89% of the remaining amount each month.
The monthly interest = Remaining Amount x Monthly Interest Remaining amount at first month = 75,000 Monthly Interest = (1.89 / 100) / 12 = 0.001575 Interest at first month = 75,000 x 0.001575 = 118.125 If in the first month, I pay 500 then 500 - 118.25 = 381.75 381.75 goes towards capital repayment. So when you come to the next month, the Remaining Amount is only 75,000 - 381.75 = 74,618.25