Day Rate Mortgages

FlemingD

I have been out of the UK for some years now and have had the benefit of a Day Rate mortgage. Is there any way I can obtain the same type of mortgage upon my return to the UK. My reason for wanting this type of mortgage is obvious once you take a look at the way the interest is calculated on what you owe. Over the whole term of the mortage and therefore the amount owed drops each month and the interest charged over the term of the mortgage is in the regi!n of 40 per cent less. In short you mortgage reduces quicker and the interest charged is far less.

Thank you

Let_Us_See

Didn't you recently post this same question under another name?

Not sure about your terminology but I assume you are asking about how mortgage interest is calculated. If so, then most lenders now apply daily interest (even if applied open a monthly or annual basis), but some lenders (mostly provincial B Ss) often have schemes based on annual interest.

FlemingD

I am not asking how the interest is calculated, I understand the way it is calculated by most UK organisations. I am asking does any UK organisation do Day Rate mortgages. If you look at the calculators on the WEB or from my own experience outside of the UK the interest paid (even with the percentage quoted ) ends up far less.

What I am after really is a fair interest rate charge, i.e. the rate quoted is the rate charged.

TrickyDicky101

Interest charged is

Outstanding Balance * Rate * YearFraction

That won't change no matter where in the world you are. It's a mathematical concept, not a jurisdictional one.

Let_Us_See

Still don't understand what you are requesting and the term "fair interest rate charge" means absolutely nothing to me. However, as this is a mortgage forum I will have one final stab in the dark.

Are referring to the quoted payable interest rate (for a particular mortgage scheme) and how this differs from the quoted APR?

Thrugelmir

FlemingD wrote: »

the interest charged over the term of the mortgage is in the regi!n of 40 per cent less.

Never known a variance as wide as this on mortgage finance.

FlemingD

I don't really understand the overall reaction to my request to whether you can obtain Day Rates for mortgages in the UK. The day rate mortgage I had was based upon interest being paid monthly and from month one I was reducing my debt. Interest was calculated every month, not at the begining of the mortgage and then lumped on the loan amount, thus making the monthly payment less. When I calculated the monthly payment including interest the payment was lower than the UK method of calculation and while the interest percentage was higher than the UK.

Having experienced a different style of mortgage which I found better I wondered if it was available in the UK. Another reason for my request is with interest rates being so low in the UK, it seemed a good idea. As yet I have not found this type of mortgage in the UK. When I have done comparison calculations the UK mortgage comes out with a higher monthly payment, but with a lower APR. Guess you can do anything with numbers as the Banks have shown us over recent years

Typhoon2000

Yes just about all mortgages in the uk calculate interest on a daily basis. So if you keep the mothly payments the same the interest you are charged reduces every month and more of your payment goes towards repaying your capital.