Daily interest mortgages

robochip

Can anyone share there views on daily interest mortgages and what are the benifits from having one

Troubleatmill_2

They cost you lots less.

That's it.

A quick google search will bring a wealth of website that explain why.


But have a looksee here for a simple explanation..

http://www.nationwide.co.uk/intermediaries/mortgages/homebuyers/flexbenDailyInterest.htm

MarkyMarkD

They don't "cost you a lot less".

The financial benefits of daily interest are way exaggerated.

If you have an interest only mortgage, daily interest costs exactly the same as monthly or annual interest.

If you have a repayment mortgage, daily interest saves you a bit of money compared to monthly, and monthly saves you quite a bit more compared to annual. But all the savings are still relatively small compared to having a better mortgage rate, unless you intend to make small overpayments frequently when daily interest will start to make more difference.

So, if you are choosing between two otherwise identical mortgages, take the one with daily interest. But if there is a rate differential, don't get obsessed by daily interest - consider very hard which is the best deal. If the rate difference is more than 0.2%, it's definitely better to have the annual or month interest mortgage than a daily; if it's more than 0.1% it's probably better to have a monthly than a daily.