HELP ME - Which is best, Interest calculated daily or anually?

getmore4less

OK here are the numbers for 28 year full term

deal 1 £100k 4.09% 2y fix 4.29% fees £995 (£500.32pm)
deal 2 £100k 4.13% 3y fix 3.49% fees £495 (£502.61pm)

To do a like for like,

we need to account for the difference in fees of £500 by adding to deal 1(asume you pay £495 up front)

We need to make the payments the same say £503)

Overpayments £900py spread out over 12 months £75 so total payment £578

deal 1
year 0 £100500
year 1 £97621
year 2 £94622 (rate rises to 4.29%)
year 3 £91688
deal 2
year 0 £100000
year 1 £97162
year 2 £94261
year 3 £92196


so even with overpayments deal 2 is better.

and this does not take into account the interest that could be earned on the savings/overpayments during the year (about £11 after tax).

Check if the lender has an overpayment amount where they will recalculate the interets.

toad2898

Thanks for this it is really helpful.

Sorry I confused the issue by saying I was tied in for 3 years not 2 when I knew this would be the case, not sure why I put that now I've re-read it!?!