mortgage interest rate calculated daily

buzi

hi, i think i read here a while back that if your mortgage interest rate is calculated daily then you could save more by making an overpayment before the end of the year, is this true?

thanks

DevCoder

On interest calculated daily any overpayment will reduce the capital (by a certain amount) so the next days calculation will be less.

It wouldn't matter what time of year you did it.

HappyMJ

Whatever day you pay into your mortgage you will start saving..

If your interest rate is 3.65% for every £100 you pay back you will save 1 penny per day from the next day after you make the payment....until the mortgage is cleared. Over 20 years these small extra payments add up.

ViolaLass

buzi wrote: »

hi, i think i read here a while back that if your mortgage interest rate is calculated daily then you could save more by making an overpayment before the end of the year, is this true?

thanks

Other way round. If your interest is calculated yearly (rare nowadays), then you save more by making an overpayment towards the end of the year (because it won't be applied before then anyway so you may as well earn interest on it in savings until that point).