should make mortgage payments straight after payday?

plzhelpmesave!

HI - just been looking through bank statement. Hubby gets paid on the last working day of the month, but we have out mortgage set to go out on the 25th - we recently remortgaged and i think this was the date it all started.

Would be be saving any interest if we changed the payment dates to the 1st of the month, so mortgage gets paid soon after hubby's paid? it should save us something as obviously we'd be charged interest on a lesser amount?
Also, does the same apply to overpayments? We will definately start overpaying in the very near future and have been told to just go and pay in at branch or set a SO - when is the best time of the month to do this for maximum savings?

many thanks for any replies!

gillian46

You need to check if the mortgag has interest charged daily, most mortgages do but not all. If it is daily interest then your pay day should be as soon as possible after your wages payday and the same for overpayments. I have set a up a standing order online for my overpayments to go out on the same day as my normal mortgage payment as my mortgage is daily interest, this also means I can change the amount for overpayment using online banking if I have some more money spare.

Hope this is helpful

getmore4less

As long as the interest is calculated daily you will save by moving the payment sooner and any overpayment should be made as soon as you have the money.

Basic rule, borrow as little as possible for the shortest time possible for the lowest rate possible, by paying earlier you are reducing the time you borrow some of the money.

If you have a repayment mortgage it is roughly equivilent to a one off overpayment of the mortgage payment. The maximum saving is a full month
example
25y £100k 6% repayment mortgage first payment at the end of the month is
£644.30 £500.00 interest £144.30 payment
which becomes a £99355.70 loan if you pay at the start.
£640.15 £496.78 interest £143.37.payment same term.
or keep the payment the same and reduce the term

Actual numbers based on paying £644pm till the loan is payed off, 296 or 301 months interest for both loans
£93409.91 end of the month
£91197.21 begining of the month
£ 2212.70 saving

www.whatsthecost.co.uk for the numbers.

One risk with moving the payment too close to the pay day is what happens if the pay is late, usualy happens to me at least once a year.

plzhelpmesave!

Thanks getmore4less for the really detailed reply. Amazing the kind of savings you can make just by changing the payment date - shoudl only take a couple of minutes! will go into branch next day off - thanks!