If the interest on your mortgage is calculated on a daily basis, does the day you make overpayments not matter?

I am currently paying over 拢300 a month extra on the day my mortgage is taken from my bank. If I make further payments throughout the month, will the day I do this make no difference to the interest paid? Thanks in advance.If the interest on your mortgage is calculated on a daily basis, does the day you make overpayments not matter?
The extra you are paying is applied to the principal loan amount, not the interest. As long as your extra payments are applied directly to the principal, it doesn't matter what day you make them. Every dollar towards the prinicipal is one less dollar that is charged interest.If the interest on your mortgage is calculated on a daily basis, does the day you make overpayments not matter?
If the interest is calculated daily, the day you make the over payment your balance is reduced and you should therefore be charged interest on a lower amount, resulting in less interest charged.





However, you should check this with your lender. Some lenders don't take overpayments into account until the end of the month, and there is usually a delay of a few days between when you make the payment and when the mortgage balance is reduced.





So find out when the balance is recalculated for interest purposes, if it isn't until the end of the month, then you may as well hold on to the cash, which is earning you interest in your bank account, for the extra few weeks.





Peter McGahan


http://www.wwfp.net/mortgage/mortgage-br鈥?/a>





Disclaimer:


The answers above are for guidance only and should not be acted upon without you receiving professional mortgage advice relevant to your circumstances. To find an independent mortgage adviser please go to http://www.impartial.co.uk.
In the long run it will matter however slightly. The interest you are paying this month is for last month but the principal you are paying is for the current month. So what day you pay will save you a few days interest and help your interest payment next month (for interest on today's balances) a little less.





Pay as early as possible and over the life of the loan it will pay off.
look at your next quarterly or monthly statement to see how your extra cash is affecting the balance. Generally, the interest is set per month and once that is covered, the extra is applied to the principal. Your next payment will not be lower, only on an interest only loan as it is calculated daily on the existing balance.
If the interest is calculated daily - then the earlier in the month you pay off your mortgage the better. Every day that your overpayment is with your lender - means you pay less interest.


:)