Weekly vs Monthly Mortgage Payments

MoonBrain01

Hello,
My mother has a Halifax interest-only retirement mortgage. While reviewing it with her, I noted that the interest is calculated daily.
I was wondering if there would be any benefit if she changed her standing order to make weekly payments, the shortest payment frequency permitted, which would equal her current monthly payment. I have searched for an online calculator to make a comparison of weekly and monthly payment but I could not find anything appropriate - everything is based on a monthly payment.
Many thanks,
MoonBrain

yksi

Yes, there will be a difference in theory. There are a lot of calculators out there that allow you to switch between weekly and monthly repayments and see a graph with amount of interest etc, but as to whether it is a dramatic change, contact Halifax to discuss it. It is probably not worthwhile and especially if the interest is only actually applied monthly.

Thrugelmir

The only way to improve the situation would be to make overpayments (however small) while maintaining the standard monthly payment. That way you'd reduce the interest and increase the amount of capital being repaid. 

AnotherJoe

My back of a fag packet calculator says that on a £100k mortgage at 2% interest she'd save about a pound a month by doing this. You can easily pro rate that for your mums circumstances. 

getmore4less

The only thing that works is paying as soon as you have the money.

Weekly is no good if income is monthly
You pay when you get paid, spreading it out over weekly does not save money. 

The most you can save is doing one extra payment is you pay your mortgage just before you get paid. 

£100,000 2% = £166. 67pm
£99,833 2% = £166.39pm
28p per month saving per £100k

yksi

Thrugelmir said:

The only way to improve the situation would be to make overpayments (however small) while maintaining the standard monthly payment. That way you'd reduce the interest and increase the amount of capital being repaid. 

This was my thinking, even if it was just say a couple of extra pounds, but it's an interest-only mortgage - are they allowed to pay back extra?

[Deleted User]

yksi said:

Thrugelmir said:

The only way to improve the situation would be to make overpayments (however small) while maintaining the standard monthly payment. That way you'd reduce the interest and increase the amount of capital being repaid. 

This was my thinking, even if it was just say a couple of extra pounds, but it's an interest-only mortgage - are they allowed to pay back extra?

Many mortgages nowdays whether interest only or repayment allow a 10% per year overpayment. Thats 10% of the balance of the mortgage that you took out. So if mum borrowed £100k, she would be able to make £10k in overpayments per year IF HER MORTGAGE TERMS ALLOW - so thats the first place to go check 
I always try and nip a bit away at my mortgage balances each month - its amazing how it adds up and also reduces the interest 

MoonBrain01

Thank you for the replies. To answer some of the questions:

• I found this online calculator which, although for a repayment mortgage, does show that weekly payment do make a small difference. 
  www.free-online-calculator-use*com/weekly-mortgage-payment-calculator*html
  (I am not permitted to post links currently - in the above, replace the * with a dot to visit the page)
• My mother decided to change to paying weekly. It wasn't difficult to arrange as she is paying my standing order. It was changed to make the same monthly payment, now split over weekly payments.
• She is paying the interest plus a little extra to chip-away at the mortgage. There is no limit on how much overpayment she can make. In fact, it appears she could pay it off early without a charge, if that were possible for her.

getmore4less

That calculator makes the savings by overpaying. 

By weekly(1/2 monthly) is the equivalent of ~13monthy payments.

What is the interest rate that is probably where the biggest saving can be made