Mortgage calculator

sh.generic

I have started mortgage with Halifax in mid June. Online I am seeing some numbers as balance on my account. I tried to calculate and never managed to get the number Halifax showing online.
The Interest on my mortgage calculated daily (they say).
My mortgage started on 20/Jun. Loan amount is 150K.
First payment was 1365 and was taken on 08/Jul. Subsequent payments (£1156) went on first working day of every month. First payment was high, coz they said it includes interest for first month(!?!).


Can someone help me understand the concept of "daily interest calculation".
Does it mean, today's interest on the loan amount becomes principal for tomorrow's Interest calculation? (This is Compound Interest calculation and I am sure bank does not work like this).

OR

Does it simply mean the bank calculates Interest on the 1st of every month after my payment and applies that Interest amount to number of days in the month? (lets say the interest for one day after my payment is 21.34 and month has 30 days, then monthly Interest is (21.34x30=640.2)?

I called bank and they said there is no Interest on the Interest amount! Interest is only on principal. But they could not confirm whether the Principal includes previous month's interest or not.

I am completely lost!

opinions4u

Interest is calculated daily, but only appears to be reflected in your online banking mortgage balance at the end of each calendar month.

So you get something like:

1st Jan balance £100,000
31st Jan interest £300

1st Feb payment £400
2nd Feb balance £99,900.
28th Feb interest £299

1st March payment £400.
2nd March balance £99,799.

etc.

Hope that makes sense. Don't assume the figure online is spot on. There are too many other variables behind the scenes. It's a useful guide only and excludes ERCs etc.