£1+ a day Mortgage OP challenge for April

fairyclicks

I'm a challenge fiend - it got me through so many debt payments over the past few years and keeps my motivation up now i'm a MFW i NEED one for working on overpayments.

£1 a day is something most of us can manage by not buying a bar of chocolate, a magazine, a bottle of coke etc etc etc yet it could potentially reduce your mortgage and interest significantly:

The MSE calculator says on a 100,000 mortgage with an interest rate of 2.5% paying off just £1 a day will mean savings of £3194 on the interest and will reduce the term by over 2 yrs :D:D

If you would like to join me on the challenge, feel free to set your own daily target and pay it off daily, weekly, monthly etc - just whatever suits you! You can put the £1+ in a jar, move it into a savings account or pay directly off the mortgage daily - all i'm asking is you put that £1+ each day aside specifically for making an overpayment and let us know how you get on

If you already make a regular overpayment why not try and put an extra £1 a day away to increase your payment? You can squeeze another bit out can't you? Lets see

fairyclicks

Challengers List

Fairyclicks - £1 a day
Kmcld2 - £1 a day
mortgage_girl - £1 a day
tjp70 - £1 a day

kmcld2

I'm up for that too!

fairyclicks

yey welcome to the thread kmcld2 will add you to the challengers list now xx

fairyclicks

whoop whoop whoop - i just made my first ever overpayment on my mortgage i have saved £30.50 in March to pay off it and today its been paid - i'm sooooooo happy and excited from now on i am going to make the payment daily though because my interest gets calculated daily! no point in wasting all those days of less interest

Takeaway_Addict

fairyclicks wrote: »

whoop whoop whoop - i just made my first ever overpayment on my mortgage i have saved £30.50 in March to pay off it and today its been paid - i'm sooooooo happy and excited from now on i am going to make the payment daily though because my interest gets calculated daily! no point in wasting all those days of less interest

Isn't there 31 days in March so techincally don't you need to pay an extra 50p?

fairyclicks

Takeaway_Addict wrote: »

Isn't there 31 days in March so techincally don't you need to pay an extra 50p?

lol! well this challenge doesn't start until April but tomorrow i might pay £1.50 :rotfl::rotfl::rotfl:

TheWebDev

fairyclicks wrote: »

from now on i am going to make the payment daily though because my interest gets calculated daily! no point in wasting all those days of less interest

It depends who your mortgage provider is and exactly how they calculate the daily interest. I'm with Nationwide and they calculate the interest daily, but they don't use todays balance to calculate it. Basically whenever I make an overpayment, the following days interest charge will be less than todays if (and only if) my overpayment covers all the interest charged since the last payment.

To clarify, if I'm being charged £10 / day in interest, and I were to make a £5 (or even £10) overpayment everyday, it would not affect the interest until the following month's regular payment is taken. If however I were to overpay £15 everyday that would cover the day's interest and reduce the balance on which interest is charged by £5. However, if I were to overpay £450 (£15 x 30 days) on the same day as the regular payment, it would reduce the balance on which interest is charged much more for the entire month.

I'm not saying that overpaying on a daily basis is wrong, but it might not be as beneficial as you think it is.

fairyclicks

TheWebDev wrote: »

It depends who your mortgage provider is and exactly how they calculate the daily interest. I'm with Nationwide and they calculate the interest daily, but they don't use todays balance to calculate it. Basically whenever I make an overpayment, the following days interest charge will be less than todays if (and only if) my overpayment covers all the interest charged since the last payment.

To clarify, if I'm being charged £10 / day in interest, and I were to make a £5 (or even £10) overpayment everyday, it would not affect the interest until the following month's regular payment is taken. If however I were to overpay £15 everyday that would cover the day's interest and reduce the balance on which interest is charged by £5. However, if I were to overpay £450 (£15 x 30 days) on the same day as the regular payment, it would reduce the balance on which interest is charged much more for the entire month.

I'm not saying that overpaying on a daily basis is wrong, but it might not be as beneficial as you think it is.

Ah ha, thats very interesting and helpful to know - thanks a lot TheWebDev - so how do i find out how my bank calculate the daily interest and what the daily interest is? am completely new to the whole MF idea so i have no clue about these things as yet.....but i'm keen to learn

mortgage_girl

Sounds like a great idea fairyclicks - count me in With my overpayment goal this year I need to find as many ways as possible to op on the mortgage.

MGx

kmcld2

Hi Fairyclicks,
You work out your daily interest by doing the following:
Divide your APR by 365. Divide that answer by 100. Then multiply that answer with your mortgage balance. E.g: A balance of £65,000 with a 4.09% APR would be worked out as follows:

4.09% / 365 = 0.011
0.011 / 100 = 0.00011
£65,000 x 0.00011 = £7.15

Hope I make sense, I'm not very good at explaining things.