Bi-weekly Payments to reduce mortgage?

ducklet_2

http://www.moneyforums.co.uk/mortgage_calculator.php

Just went to this mortgage calculator and saw it had the option for bi-weekly payments. Does anyone know what these are because they appear to half the interest rate? I thought main mortgage payments could only be made on a monthly basis. ie pay at the beginning of the month and reduce the overall interest paid on the capital over the month. Any ideas or do you think they have made a mistake?

crossleydd42

I imagine that bi-weekly is an American way of saying fortnightly. I suppose that fortnightly payments would reduce the interest and eventual period significantly. Of course, your problem is finding a lender who operates this!

ducklet_2

Too right, i've never heard of this in relation to any UK mortgage lenders. Just did a search on google for 'bi-weekly mortgage payments' and it flagged up the HSBC. Probably have to phone them as the information on their webpage doesn't go into detail about when mortgage payments can be scheduled!!
Not sure if it does reduce the mortgage any faster than a normal monthly one though!

SammyD_2

Bi-weekly is comon in New Zealand - I looked everywhere here for a biweekly mortgage, but couldn't find one anywhere. You will pay your mortgage off faster because you make more payments (not because you are paying fortnightly per se, but in the same way someone who is paid four-weekly gets and "extra" pay over someone paid monthly if that makes sense), and also because if interest is calculated daily you will be paying some of what would have been your monthly payment earlier (ie on day 14 and day 28 rather than day 30 or 31.)

bylromarha

A collegues OH used to go in his mortgage branch and pay weekly to reduce the interest ASAP.

He couldn't set up a DD to do this, had to go into branch. Reduced the interest each month quite a lot it seems.

I wouldn't be able to do it on my current mortgage as overpayemtns only allowed if £500+, but my old mortgage said I would be able to pay weekly with them by going into the branch. Trouble was the branch was a 20 minute car ride, so not worth the effort as I never went that way unless going to the bank!

mummytofour

In Canada they pay bi-weekly also, but they are often paid this way too.

roswell

I think Northern rock do a weekly morgage a colleuge at work took this and it cut 7 years off there morgage apparently.

MikeLB

I have heard of it being done if you set up a weekly or fortnightly standing order. Havent tried it personally but as the saying goes, I know someone who has!

Joe_Bloggs

It makes an insignificant difference when mortgage interest is calculated daily and payments taken monthly. There are a few 'Quill technology' merchants left who only deal in annual interest and total annual repayments. Better to save overpayments in interest bearing accounts until close to the annual accounting day if possible.Can the FSA get rid of these dinosaurs ! Are there any left ?
J_B. (A Quill was a writing implement made from the feather of a bird.)

ducklet_2

Will check with Northern Rock to see if they do bi-monthly payments and update the thread. Anything(within reason) to reduce the mortgage

crossleydd42

Do that, ducklet. We'll be interested in the situation.