mortgage interest for 29/02?

eeyorerules

I have a repayment mortgage with daily interest and I go in on the first banking day of every month to get an updated o/s balance as I like to see it decreasing!!! (slowly). :j When I checked it today the balance was about a days interest less than I expected it to be and I had not made any overpayments last month. I was wondering if it has anything to do with the 29/2 - although I can't imagine the bank lending money for a day without charging interest on it:eek: . Anyone else find this? Maybe its my maths but I have checked it a few times.

sachsaini

I always check my balance on line everyday and I can tell you that nationwide did not charge me any interest on the 29th of feb

financialbliss

Hi,

I'm also keeping a close eye on my mortgage interest and also noticed that Nationwide didn't charge any interest on 29th February.

But I'm sure they probably also didn't charge any savings interest on 29th February, otherwise they're going to be out of pocket...

FB.

eeyorerules

Yes, its Nationwide I have my mortgage with.

MarkyMarkD

There are three ways that lenders can calculate their interest in a leap year.

(1) Like Nationwide, they can take the annual rate and divide it by 365, like in a normal year, and apply that rate as the daily rate. In this scenario, you won't get charged (or credited) any interest on 29 February.

(2) Like some other banks, they can take the annual rate and divide it by 366 in a leap year, rather than 365 in a normal year. In this scenario, you would get charged (or credited) interest on 29 February, but the daily rate would be fractionally lower throughout the year.

(3) Like some other banks, they can take the annual rate and divide it by 365 in every year including leap years, and then charge (or credit) interest on each day at the same daily rate. This means that the rate charged (or credited) in the full year is actually 366/365 times the normal annual rate, but it's still fair as the daily interest rate is the same in a leap year as a normal year.

eeyorerules

Well it's a very pleasant and welcome surprise:j . It will help balance out working an extra day for the same annual salary :mad: . I appreciate savers may not agree but I don't have any savings at the minute to lose out on interest!

MarkyMarkD

The leap year working argument is a fairly weak one, to be honest.

The number of working days in a year varies depending which day of the week the year starts on.

2007 started on a Monday and ended on a Monday, so it had quite a lot of working days.

2006 started on a Sunday and ended on a Sunday, so it had 1 working day less.

2008 started on a Tuesday and ended on a Tuesday and was a leap year so it had 1 more working day than 2007.

2009 will start on a Wednesday and end on a Wednesday, so it'll have the same number of working days as 2007.

I didn't see anyone clamouring for a pay cut in 2006 because they were working one less day. The converse makes sense in 2008.

setmefree2

I have a Woolwich/ Barclays tracker - they seem to have added interest for 29th...:money: