Date of mortgage payment

magpies79

So just a quick one really does it make any difference in terms of payment amount and interest on when my mortgage is paid every month because of a job I had years ago I change my payment date from 10th to the 28th.

Now what happens is every time there’s a interest rate cut my mortgage goes up like £15 a month so I l have to ring up and after my payments gone out for that month they then recalculate it.

would it be better to say pay this months on the 28th then change it for next month on the 1st and pay it again then if I have the funds.

Exodi

Ultimately the interest is calculated daily on the balance, so it doesn't make a difference in the grand scheme when you make payments (but obviously the 'earlier' you pay, the less interest will be charged).

magpies79 said:

Now what happens is every time there’s a interest rate cut my mortgage goes up like £15 a month so I l have to ring up and after my payments gone out for that month they then recalculate it.

Sorry, I didn't understand this bit.

magpies79

Sorry for not explaining the last part better.

 so over the last few interest rate cuts I’ll get a letter on the 1st if they’re has been a cut so say 0.25% then my mortgage payments always increase say £10-15 because they are saying because the payment hasn’t gone out yet for that month it goes out on the 28th I have to ring up once that payments gone out and they they recalculate it and then it normally goes down by £3-£4 lol 

Exodi

I feel like I'm having a dumb moment here - why are your mortgage payments increasing because of an interest rate cut? I'm still no clearer - hopefully someone more au fait with the arrangement you have can comment!

magpies79 said:

every time there’s a interest rate cut my mortgage goes up like £15 a month 

magpies79 said:

so over the last few interest rate cuts I’ll get a letter on the 1st if they’re has been a cut so say 0.25% then my mortgage payments always increase say £10-15

magpies79

I don’t know they said it’s because when they apply the rate cut they do it on the 1st of the month and because my payment isn’t taken til the 28th they calculate at what ever my balance is at the time it always go up.

what I’m told to do is ring after the 28th when the payment is taken and request them to recalculate it.

BikingBud

magpies79 said:

Sorry for not explaining the last part better.

 so over the last few interest rate cuts - Interest rate cuts so interest accruing will be lower.

I’ll get a letter on the 1st if they’re has been a cut so say 0.25% then my mortgage payments always increase say £10-15 - Counter intuitive how can it go up if interest rate has dropped

because they are saying because the payment hasn’t gone out yet for that month it goes out on the 28th - So you have overpaid until the payments are reduced to match revised interest rate?

I have to ring up once that payments gone out and they they recalculate it and then it normally goes down by £3-£4 lol - Below previous payment or below increased payment?

If the rate is cut on the 1st then for the subsequent days until your next payment there is a risk of overpayment if the DD is not reduced immediately, not underpayment. If you are paying 4%, then daily interest will be 4%/365 and if it drops by 1/4% then daily interest will drop to 3.75%/365. 

Hence your daily interest accruing will have dropped and if you do not just your payment down immediately then you will have overpaid by > amount outstanding*number of days*0.25%/365
  
I am also baffled are you able to see your mortgage account and the actual calculations?

eschaton

When mortgage rates have increased, have your payments dropped?