Paying mortgage weekly

grumbler

jrawle said:

grumbler said:

Yes, but does this ever happen in practice? For any loan the first payment is never at the same day when you get the money. Yes, you can pay, and this will be an overpayment. 
With weekly payments you save a little because your first (smaller) payment is at the end of the first week, not the first month.

So the question isn't whether weekly payments save money, it's whether starting making payments after a week or a month will save money.

No, generally, you can start making monthly (big) payments after a week or two weeks or three weeks.

In practice, if it's monthly, you start after a month; if it's weekly you start after a week.

You start and then make either frequent small steps or less frequent big ones. My estimation was for the difference between the former and the latter.

You are making the assumption that if you choose to pay weekly, those payments will start in a week's time, whereas monthly payments would start in a month's time. 

Yes

It's just as likely that this hypothetical lender that allows you to make weekly payments would start taking those weekly payments on the first of the following month, the same day that they would have taken the first monthly payment. Given that no mainstream lenders allow you to pay weekly, it's a pointless discussion anyway. Were any banks actually to offer this facility, it would all be down to the details of exactly when they took payment.

I agree, but it was a general question even without specifying how much weekly payments are smaller than monthly ones.

My estimation was purely mathematical based on the most reasonable (IMO) scenario. If you just divide a monthly payment by 4 and make manual payments every week, it's obvious that you'll be overpaying a lot and saving a lot as a result.

In any case, whenever I have started a new mortgage, the first payment has been larger to cover the additional period until the first of the following month. From then on, the payments are made to cover each month in advance. In this case, even if the first weekly payment was taken at the end of the first week, while you might save a small amount of interest over that initial period, from then on, you would be worse off in every subsequent month.

Well, the first weekly payment can be bigger too to cover extra part of a week. My estimation still stands however theoretical it is.
Basically, when paying weekly, you split the monthly payment into four parts and pay first three parts in advance  - three weeks in advance, two weeks and one week accordingly.

MWT

Aside from a one-time advantage when you make the first payment, when it comes to making subsequent payments all that really matters is that you pay as soon as you can after your salary hits your current account.

So the benefit comes from aligning your mortgage payments with your wages...

... if you are paid monthly then pay the mortgage monthly, if you are paid weekly then pay the mortgage weekly...

This is why it is more common to do this in the US where being paid monthly is not as common as being paid every 2 weeks, or even weekly.

dunstonh

What's 'extra payment'?  It's 52 smaller payments vs 12 bigger ones. And, I'm pretty sure, a lender will will use a different amount for weekly payments, not just 1/4 of monthly one.
This is assuming that it's the lender who calculates the payments and collects them by a DD. If you just pay one quoter every week, then yes, you essentially overpay about one monthly amount every year.

The assumption is that it would be 13 vs 12 payments of the same amounts.     UK lenders don't do weekly payments.  Hence one month you would make an overpayment.

BikingBud

MWT said:

Aside from a one-time advantage when you make the first payment, when it comes to making subsequent payments all that really matters is that you pay as soon as you can after your salary hits your current account.

So the benefit comes from aligning your mortgage payments with your wages...

... if you are paid monthly then pay the mortgage monthly, if you are paid weekly then pay the mortgage weekly...

This is why it is more common to do this in the US where being paid monthly is not as common as being paid every 2 weeks, or even weekly.

Again interest rate comparison comes into it, eg Santander giving 5.08% on easy access saver, mortgage 1.19%. Current account into easy access and back into current account to pay mortgage only when required.

I'm lucky to have a good split but you need to see what you can get and work it out for yourself rather than following over simplistic "rules"

MWT

BikingBud said:

Again interest rate comparison comes into it, eg Santander giving 5.08% on easy access saver, mortgage 1.19%. Current account into easy access and back into current account to pay mortgage only when required.

I'm lucky to have a good split but you need to see what you can get and work it out for yourself rather than following over simplistic "rules"

True, but the answer given was in the context of taking a new mortgage, not trying to change the payment frequency on an old fix compared to current rates, but yes, if there is a large disparity between mortgage rate and savings rate in your favour then it is better save than over-pay.