Extra day in leap year

lisyloo

I think I'm going to write to them.
I can't stand not knowing the answer

Difficult to get any mathematical sense out of the call centre people who don't understand the issues.

System

Didn't realise you weren't on daily interest. On a daily scenario rate "should" be annual/366 in a leap year *no of days in a month provided you had the mortgage out on leap day.

On a monthly basis don't know how calculations should work - I'd expect the same interest every month if I had an interest only fixed rate mortgage, after all I don't get paid less salary in February (or more in July!) but then this would be logical.

I wouldn't rely on anyone you can speak to at a call centre - I've just spoken to 3 people in 3 different lending sections of the same bank and had to explain to each one how their own flexible mortgage worked. I'd like a special hotline only for financially literate people so you don't get muppets starting a standard spiel explaining what Bank of England base rate is etc.

lisyloo

Didn't realise you weren't on daily interest.

Yes I was perfectly aware of that from the beginning.

I'm not quite clear on the point you are making.

On my statement there is only one line for interest, however they must actually calculate it in between as I've got copies of credit reports that show different amounts.

Sorry I'm not sure what you are saying.

from my point of view if they say the mortgage is say 4.09% for a year and a year is "1st Jan to 31st December" then I reckon that's what they should charge me for 1st Jan - 31st December (regardless of the number of days).

I haven't gone down into every single term & condition but in simple terms I think they should charge what they say in my offer.

lurkalot

OK, I have finally managed to work it out and I don't think that Alliance & Leicester are charging extra.

My interest if calculated annually but if they need to calculate specific periods e.g. interest rate rises then they use the formula

initial balance * rate * number of days / number of days in year

This works out fairly in leap years because although the total number of days is 366 the DIVISOR is also 366.

I could not manage to get this information out of call centre staff but I have satisfied myself about this by looking at last years statemant and my current balance this year.

I believe ING are doing something similar so you get no interest benefit on your savings account.

I'm gals that's all sorted.

lisyloo

oops that was meant to be posted by lisyloo.
lisyloo and lurkalot are married and share fight over a computer.

No intention to deceive etc.

Mozilla_2

Isn't a year officially 365 ¹/₄ days?

Therefore a leap year is the accumulation of the ¹/₄ days to get the extra whole day.

You are simply being charged the extra days interest because you haven't been charged for the ¹/₄ days from the previous 4 years!!

lisyloo

Isn't a year officially 365 1/4 days?

In the terms of my mortgage it is "the period between Jan 1st - Dec 31st".

I know from my calculations that in non-leap years they charge 1/365th per day for 365 days.
In leap years they charge 1/366th per day for 366 days.

That's fine with me as I'm not paying extra.

Thrugelmir

Spam reported

Yorkie1

Thrugelmir wrote: »

Spam reported

Now that's a very keen spammer, resurrecting a 6-year old thread!

loracan1

Perhaps they count the leap year as a standard year and to them you get an extra day for free for the other 3?