Interest on a mortgage is charged on the balance every day.
So if you owe €100,000 today, you will be charged €6.30 a day ( €2,300 a year /365 days)
If you reduce this to €76,000, you will be charged €4.78 a day.
So you are better off paying the money off up front.
That is assuming that there is no difference in the penalties for early repayment of a fixed rate. But even if there is such a penalty, it's still probably the right thing to do.
Brendan
I seem to recall some time back that someone did a calculation of paying their mortgage payments as 52 weekly payments instead of 12 calendar month payments and so by doing this they cut quite a bit off the end time of the mortgage.
I think they were dividing their monthly payment by 4 and paying this amount weekly.
If as your example states, the only options are to overpay monthly by 2k or save the 2k each month and pay off 24k at the end of the year, then overpaying monthly would save you more interest. If however, you already have the 24k saved at the start of the year then paying it immediately is obviously the better option.Example repayment in January =1000, I pay 3000, repayment in February is 990, I pay 2990, repayment in March is 980 I pay 2980 etc etc
Or is it better to pay off 24k at the end of the year?
If as your example states, the only options are to overpay monthly by 2k or save the 2k each month and pay off 24k at the end of the year, then overpaying monthly would save you more interest. If however, you already have the 24k saved at the start of the year then paying it immediately is obviously the better option.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?