Daily interest and weekends

h4nym

Hi there

Bit of a 'techie' question here, but I really need to understand the answer! We have a £200,000 Natwest Offset mortgage @ 6.45%. A bit expensive, yes, but the offset features more than make up for it... we're overpaying by several thousand per month at the mo, so I want the full flexibility.

Anyway - the main question is this:

At 6.45%, if interest is charged daily, but only during weekdays, then every £1000 overpaid represents a saving of 25p every weekday and nothing for the two days of the weekend.

Alternatively, over a 7-day week, the calculation is 17p, but extends over the full 7-day week.

So - is interest calculated during weekends too?

Question isn't totally prosaic: we normally maintain a balance in a business account at another bank. With the advent of same-day payments later on in May, it might make sense to transfer the money on a Friday and transfer it back on the Monday if it's needed. But there are bank charges involved with the business account, so it would be good to understand what the implications are.

For example: transferring £25,000 on a Friday at a cost of 40p would potentially save us £8.85 over a weekend. Or alternatively it could merely cost us 40p!

Over a bank holiday weekend, of course, this works out at £25... if, of course, the clock doesn't stop ticking over the long weekend.

TIA

H

ailuro2

Do you give the banks the money back over the weekend?

If the answer is no I think you'll find you're being charged interest on it, no matter what day of the week it is.

Jonbvn

Interest is charged or earnt 7 days a week.

financialbliss

I'm keeping a close eye on mortgage interest - I wasn't charge interest on 29th February this year, but I was told that this is standard practice.

But I agree with Jonbvn - mortgage interest is otherwise applied every day, including weekends.

FB.