Borrowers paying more for annual interest

Jonbvn

Interesting article in The Times this morning regarding lenders who calculate interest annually.

Anybody who has an annual interest mortgage should carefully time their overpayments to be paid immediately before the date the annual interest review is done. Overpayments throughout the year should be saved in a high interest a/c (ISA if possible) and paid off as a lump sum at the appropriate time.

Lenders who still use annual calculations include Giraffe Money, Bristol & West, Leeds Building Society, West Bromwich Building Society, Barnsley, Bank of Ireland, Bath, Buckinghamshire, Catholic, Chorley & District, Dunfermline, Earl Shilton Building Society, National Counties, Holmesdale, Nottingham, Progressive, Vernon and Chesham.

setmefree2

Thanks for that. Is there no end to the tricks banks & building societies will use to take our money:rolleyes:. Wish they would put their efforts in to delivering better customer service and financial products. No mention of Woolwich/Barclays there does that mean we have nothing to worry about?

phizzimum

Woolwich/Barclays calculate interest daily - at least they do for our mortgage

I'm amazed at how many lenders still calculate annually - I thought they'd all stopped doing that years ago.

Jonbvn

IMHO the above above noted banks and BS are no better than your average Nigerian scammer. Of course they will say it was all listed in your mortgage offer etc. However, when you look at the number of borrowers involved it suddenly becomes big money.

They say their computer systems are set up that way. Amazing that when it works to their advantage. How quickly do you think they would change their systems if it was to their disadvantage? Simply put - profit by deceit.

Another excellent demonstration of the fact that your bank and/or BS is NOT your friend! Forewarned is forearmed...........

Trying_to_be_good

It's always been a question I've asked when applying for a mortgage - daily or annual interest calculation.

Though I don't think they're ripping people off - it will all be priced into their product, so you need to consider this info along with fees etc that are also part of the product along with the headline interest rate.

It also makes absolutely no difference at all for those not paying off any capital on their mortgage, i.e. on interest-only and not overpaying.