Mortgage Payments - Make them more often?

ShelbySmith

Someone recently advised me to make weekly payments to my mortgage instead of monthly as this would mean I would pay less interest and therefore pay my mortgage off quicker. Does anyone currently do this?

VIGILANT22

Did they explain how this could be achieved??..that's if the lender would accept this...?

Cannon_Fodder

Presumably daily calculation of interest would work out a bit cheaper with weekly chunks of money thrown at it.

But I can't recall anyone going to the bother, or if a lender would let you.

getmore4less

This comes up every few months

Get them to explain how it works

The best way is to pay as much as you can as soon as you get paid.

Since most people get paid monthly paying weekly actualy delays payments so costs more so it is rubbish advice unless you get paid weekly.

If they mean pay 1/4 of you normal monthly payment weekly thats just an extra payment each year since there are 13 4week periods in a year

Phantomer

I am registered with the UK Credit Consumers & hold a licence.
I am also registered with the Data Protection & hold a licence.

I have been working for major Mortgage & Secure Loan Companies in UK for a number of years.

I can tell you that all Mortgage & Secure Loan Accounts are charged at a daily rate of interest.

Not all Mortgage or Secure Loan Companies will allow weekly payments & there are those Companies that will not allow Standing Orders either.

It is best to check with your Mortgage or Secure Loan Comany 1st !!

There are several ways to repay your loan.

1. Direct Debit
2. Standing Order
3. Cash over the counter at your local branch
4. Cheque payments (these are being phased out)
5. Debit Card or Credit Card payments over the telephone
6. Bank Transfers...

The majority of Loan Companies will want you to pay by Direct Debit on a day of the month fixed by the lender. That way they know they will make mega bucks from you.

It's all about interest payable by you over the Loan Term.

I will give you two senario's.

When interest rates fluctuate, the Lender will send you a letter notifying you of the new monthly figure.

1:: DIRECT DEBIT per calendar month:

Because you have signed a Direct Debit mandate, if there are insufficient funds in your account to meet the Direct Debit, the lender will send you a letter and charge your Loan Account with a suitable fee ($50) or (£35) for the priviledge and because it is your Bank Account that is affected, your Bank also charges your Bank Account with a similar fee!! [ouch]

2:: STANDING ORDER weekly:

You can from the comfort of your own home, go on-line using a secure link between your home PC and your own Bank, set up a SECURE link to gain access to view your own Bank Account(s). You are able to cancel your DIRECT DEBIT to your Mortgage or Secure Loan Lender(s) and alter your payment arrangement to STANDING ORDER instead. It will ask you for the frequency for payments. The one you want is 7 daily (weekly). You also need to know the current monthly figure the lender requires.

Look at the last letter indicating the new monthly figure.

Always but, always round the figure up to the nearest whole $10 / £10 and then divide the figure by 4. That is the amount that you need to place into the box indicating the weekly amount.

AND THE REASON?

1. Pay by Direct Debit and you will pay your loan off around the end of your agreed term.

2. Pay by weekly Standing Order and you will save yourself about 30-36 months interest!

By paying every week, you reduce the next weeks interest. I agree, the difference between a weekly and monthly strategy is minimal within the 1st month, but weekly IS slightly more beneficial. As time goes on, the gap widens and so, the more you are able to pay off weekly, the sooner you will repay your loan.

It's several thousand $/£.

A new car or perhaps a boat or holiday?

Incidentally, I saved £38,367 over 23 years. Not bad eh?!

redpete

Phantomer - all that waffle makes it really difficult to spot what you're saying. It comes down to the fact that you are effectively overpaying by the equivalent of 1 month's payment a year, nothing to do with the difference between weekly or monthly payments nor the difference between standing orders and direct debits.

Just like getmore4less said.