We have now moved to a standing order mortgage payment from direct debit. Instead of paying on the 7th of the month we are now paying on the 24th. We did this so that the fiirst call on funds immediately after salary payments would meet the mortgage payments. Are there consequences for us? thank you
Impact of moving a mortgage payment date
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Brendan Burgess
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In terms of the interest calculation, you will have an extra 17 days' interest per year.
So on a mortgage of €100,000 @ 4.5% interest, you will pay an extra
€4,500/ 365* 17 = €200
I presume you have done this with the agreement of the lender?
So on a mortgage of €100,000 @ 4.5% interest, you will pay an extra
€4,500/ 365* 17 = €200
I presume you have done this with the agreement of the lender?
Yes. Everything is formally agreed to. Looking at some of the advice that some of contributors give I am wondering if in the new circumstances of our repayments (more control) that I could adjust those repayments to deal with other loans with higher interest without going into arrears that would affect our/my credit rating. If that makes any sense, I am not that financially literate. Thanks
Brendan Burgess
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It is probably better to have a standing order than a direct debit as you have more control over it. You can cancel it or vary it much more easily.
The lender will tell you how much you are obliged to pay.
If you pay less than this you will go into arrears and damage your credit rating.
The lender will tell you how much you are obliged to pay.
If you pay less than this you will go into arrears and damage your credit rating.
It's a once-off rather than per year isn't it? Once the first 'month' with the extra 17 days is past, all future periods are true months.
So am I understanding this correctly, the 17 day change will add 200 to the interest bill of the outstanding amount of the mortgage?
Gerry Canning
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Yes, All you have done is extend your mortgage by 17 days.ie circa 200.
There should be no other implications.
There should be no other implications.
Brendan Burgess
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Hi Orka
I wondered about this as I wrote it.
I think it is annual.
In simple terms, say you have a mortgage of €100,000 interest only at 10%.
If you make one payment a year on the 1 July,you will pay around €9,500
If you move it forward to 31 December, you will pay €10,000.
It's the same the following year.
So moving a date forward costs you more each year.
So Brendan your telling me the standing order gives us more control but it will cost. Thats the part that is now confusing me. Am I going with Orka or with your thinking?
The first year you pay less because you are not paying 'interest on interest' for the second half of the year. But the second year, you are accruing interest from 1 July to 1 July which will be a full year.
In your example, a 1 July payment schedule will mean interest of 4,881 + 10K + 10K + 10K + 10K (for however many years) + 4,881 for the final half year.
A 31 December payment schedule will mean interest of 10K + 10K + 10K + 10K (for however many years).
So the difference is just 10K minus the two half years' 4,881 = 10,000 - 9,762 = 238. It doesn't matter how many years the loan is for - it's a once-off cost.
Gerry thanks for that reply. I just saw your profile and you might be in a positions to answer these questions. (1) When is your credit rating affected? My info is that you can go the value of 1 month in mortgage arrears before your credit rating is downgraded.
(2)Previously I wrote that I am now paying by SO could I begin to tweek my repayments of my morgage to keep within this credit line an pay more off of higher interest loans?
(3) Am I talking thro my hat?
(2)Previously I wrote that I am now paying by SO could I begin to tweek my repayments of my morgage to keep within this credit line an pay more off of higher interest loans?
(3) Am I talking thro my hat?