Weekly or Biweekly mortgage?

G

gar32

Registered User
Messages
121
I am looking to change payment of my mortgage to wekly as it will save alot in long run. Does anyone know if this can be done? I ask about it with lender but they say know but I have heard that it can be done this way saving time & money on interest payment. Sure the banks would go mad if everyone start to pay weekly but lets some one start & all will follow as was seen with interest rates. Thnank you Bank of Scotland.
 
I pay the mortgage every fortnight (biweekly can mean either twice a week, or every two weeks, so I don't like using that term), with BoI. Many banks will do a mortgage more often than once a month, it can be worth asking around.
 
It will only work if your lender calculates the interest on your mortgage daily or weekly - most calculate on a monthly basis so paying more frequently will not make a difference.

Sarah

www.rea.ie
 
I've always been curious about this. Does anybody have an authoritative list of how frequently each lender calculates interest? As far as I know nobody (with the possible exception of INBS) still persists in calculating interest annually (EBS used to but switched to monthly a few years ago knocking c. 0.4% off the effective rate charged), Sarah W says that most do it monthly and I think that a few (mostly the regular banks as opposed to current or former building societies?) do it daily. Maybe somebody has a list of who does what?
 
Was hoping to see if any one know if asked for does the bank have to give you weekly? I heard from an estate agent I know that the can not refuss you if you ask. Does it go by contract? Is there some where I could look to find out regulations or law on subject? I know this would save me lots of money & be easier to manage as I am not paid monthly. Hope some one can help.
 
I'm not sure about any other lending institutions, but I know that with an NIB tracker mortgage payments can be made, and capital/interest reductions applied to the overall loan, on a daily basis. I was told by the NIB representative I'm dealing with that weekly, fortnightly, monthly, whatever... payment frequency would be no problem. I can't tell you whether this applies to the other mortgage packages offered by NIB. Incidentally I have found them easy to deal with, very straight forward, that's so far though - I haven't actually drawn down the mortgage or started making repayments yet, hopefully I will be as satisfied with the post sales service as the pre sales
 
For clarification it should be noted that to save interest costs on your mortgage you should pay off as much as possible as soon as possible. In short, you should make a repayment as soon as you get paid; be that weekly, fortnightly or monthly. If you get paid monthly and you make multiple smaller payments thoughout the month, it will actully cost you more (the interest charge on the amount you could have paid off at the start of the month but didn't).
 
When I had a mortgage with Ulster Bank I tried to change my payments from monthly to every fornight they said that this cannot be done .....PTSB NIB and most of the other banks are able to do this .... what is the issue with Ulster Bank ?

Did anyone find the same ?
 
Dearg Doom said:
For clarification it should be noted that to save interest costs on your mortgage you should pay off as much as possible as soon as possible.
Click to expand...

But no sooner than the lender calculates interest! If you pay more frequently than this then you lose the use of the money for no benefit in the form of reduced interest charges. Of couse for a lender who charges interest annually you will still most likely be obliged to make monthly repayments even though this does not save you anything over making them annually. If a lender calculates interest monthly then there is no advantage in making repayments more frequently than that either. With weekly (if anybody does that) or daily calculation of interest more frequent repayments can help. Of course with any owner occupier variable rate mortgage you should be able to make lump sum capital repayments (possibly of some minimum amount) any time and immediately gain the benefit in terms of a reduction in the outstanding capital owed and a reduction in ongoing interest charges regardless of how often the lender calculates interest.
 
Just called AIB to see how they charge interest.

Interest is accrued on a daily basis and is then charged every quarter.
According to AIB, I am getting the full benefit of my current monthly repayments.

If I were to make fortnightly repayments, I would save <€150 over the remaining term of the mortgage. If I were to make weekly payments, this would work out to be more expensive than fortnightly.

Anyone else with AIB? My mortgage is a tracker.
 
techman said:
If I were to make fortnightly repayments, I would save <€150 over the remaining term of the mortgage. If I were to make weekly payments, this would work out to be more expensive than fortnightly.
Click to expand...

Can you explain the second part? The mortgage should be less expensive the more frequently you make repayments. Maybe you mean that the repayments themselves will be higher weekly versus fortnightly and fortnightly versus monthly as opposed to the interest overall bill being higher? If your lender is calculating interest daily and you can afford to make repayments more regularly than monthly (and you have no other pressing use for the money) then doing so is a good way to save on interest charges over the long term.
 
"If I were to make weekly payments, this would work out to be more expensive than fortnightly."

I don't know why this is. Neither could the person I was speaking to in AIB explain it to me either.

More expensive in terms of the total interest bill over the remaining term of the mortgage.

I was surprised that paying fortnightly, as opposed to monthly, only saved less than €7 per annum in interest.

Could someone else with AIB check this?
 
techman said:
More expensive in terms of the total interest bill over the remaining term of the mortgage.
Click to expand...

If they are calculating interest daily then this does not make sense. Unless they are levying charges for more frequent repayments or something!?

I was surprised that paying fortnightly, as opposed to monthly, only saved less than €7 per annum in interest.
Click to expand...

You should find that the effective term will be less and your capital outstanding is reducing at a faster rate when paying more frequently than monthly. You need to take the longer term view and not just look at one individual year.
 
"If I were to make weekly payments, this would work out to be more expensive than fortnightly."

Perhaps they charge for each payment, like a standing order charge?
 
Hi, I am with AIB who calculate interest daily. I also pay back my loan every fortnight but with a slight twist. Say your annual mortgage repayment is 15,000 p.a. This works out for most people at 1,250 per month. In this case, if you decide to pay bi-weekly, then pay back 1,250/4*52 per annum. This works out to be an annual mortgage re-payment of 16,250, higher than before! Why? Because there is actually more than 4 weeks in a month. Every 2 weeks, you will pay back 16,250/26 = 625.

Now this is important for 2 reasons:
1. Because if your bank is calculating interest daily (not monthly), you'll save thousands over the term.
2. You won't miss the extra money you are paying because it feels like you are paying the same amount every month. In fact, you're paying an extra month every year.

Banks do not advertise this method for obvious reasons. I was able to shave over 3 years off my term as a result of this.

Don't forget to negotiate your interest rate aswell.

t
 
Thanks to this thread it looks like I'll be saving some money!

I'm on a BOI tracker ECB + 95 basis points. They just confirmed today on the phone that interest is calculated daily, and that more frequent payments would reduce the interest.
Payment frequency can be changed to fortnightly or weekly by writing them a letter.
 
I too bank with BOI and have my mortgage with them (Tracker). I changed my repayments from monthly to every two weeks about 1 year ago as they said they calculate interest on the capital sum on a daily basis.

However, though I asked to have my repayments made weekly, they stated that BOI will only allow monthly repayments or repayments every two weeks. Weekly payments were not an option.

Eblanoid, can you confirm that BOI now say you can pay weekly? I'd be interested in this. Perhaps I should just ring them.....:rolleyes:
 
zardebt said:
When I had a mortgage with Ulster Bank I tried to change my payments from monthly to every fornight they said that this cannot be done .....PTSB NIB and most of the other banks are able to do this .... what is the issue with Ulster Bank ?

Did anyone find the same ?
Click to expand...

I also asked First Active could I pay weekly or fortnightly and they said no, they only accept monthly payments.
 
Okay, so I just phoned BOI and they have confirmed that they will now accept weekly mortgage payments!!

Sweeeeet :D
 
You must log in or register to reply here.
Back
Top