Does the direct debit payment date for a fixed rate repayment mortgage impact interest?

AJeff123

We have a fixed rate repayment mortgage with Halifax. We set our direct debit for payday (27th) as we were under the assumption that the payment date did not impact it. We have seen that dependent on the day it comes out, the interest charged is roughly £20 per day more. We have tried to google and contacted the bank several times but they are unable to give us a clear answer for our type of mortgage - can anyone provide any clarity for a fixed rate mortgage please? My concern is that we have potentially inflicted thousands of pounds worth of interest unintentionally on to our overall amount (monthly DD stays the same), without being advised that this would be the case.

dunstonh

Does the direct debit payment date for a fixed rate repayment mortgage impact interest?

no.  Interest is calculated daily with most.

 We have seen that dependent on the day it comes out, the interest charged is roughly £20 per day more. 

Due to bank holidays and weekends there will be small variances but it will even itself out.  i..e one extra day in month one is one less day in month two.

My concern is that we have potentially inflicted thousands of pounds worth of interest unintentionally on to our overall amount (monthly DD stays the same), without being advised that this would be the case.

No concern.  No issue.  

AJeff123

Thanks DunstonH! It says online that it is best to pay on the 1st for most mortgages but not sure if that then impacts ours.

grumbler

AJeff123 said:

Thanks DunstonH! It says online that it is best to pay on the 1st for most mortgages but not sure if that then impacts ours.

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Instead of changing the date make one-off overpayment equal to your monthly payment and from now on you'll be effectively paying on the 27th in advance for the next month. 
How much can you save by changing the date? In your case it's one-off overpayment equal to about your one  monthly payment - https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

dunstonh

AJeff123 said:

Thanks DunstonH! It says online that it is best to pay on the 1st for most mortgages but not sure if that then impacts ours.

Sometimes the internet is full of rubbish.    It is not best to pay on the 1st for most mortgages.     I have seen this referenced once before and I believe it is information relating to another country where they charge interest by the month and not by the day.

As interest accrues daily, the answer is to pay the money as soon as possible.  1 day after the last payment is the best day.  two days after is the next best,  three days after is the next after that and so on.

MWT

About the only reason paying on the first could make a difference is if you are paid on the last day of the previous month and you leave the money in your current account earning 0% interest.

Not exactly life-changing savings to be made but if you leave your mortgage payment sitting in your account not earning any interest then the shorter the period it sits there before being paid into your mortgage account the better...