Paying mortgage fortnightly

E

encourager

Guest
Hi
Just a quick question - if I organise to pay off my monthly mortgage payments fortnightly in 2 equal installments, will this either a) reduce the capital or b) save you interest or c) have no effect whatsoever?

Am on a variable tracker rate with PTSB.

I also want to increase the payments and saw from another reply that it will reduce the capital - how can you calculate by how much?

Thanks!
 
you can calculate how much your increased payments will affect your interest repayment/term here http://www.jeacle.ie/mortgage/

paying fortnightly also means you make extra payments annually eg: 1000x12 months= 12K or 500x26weeks=13K
so I would say (a) and (b).. make sure you agree with the bank that this comes off your principal though (many other threads on this if you search)
 
This is something I'd also be interested in doing. You'd be paying more without really realising, especially if you are paid weekly or fortnightly.
 
If you can then it makes sense to make repayments as frequently as possible with the caveat that there is no benefit to making them more frequently than the lender calculates interest. Most lenders do this daily these days so if you could make repayments daily (which is basically the principle on which offset/current account mortgages work), weekly or fortnightly rather than monthly then you will save money because you are chipping away at the capital more quickly (and as mentioned probably paying back more overall with more frequent repayments). However if your lender persists in calculating interest monthly (do any still do this? EBS for one used to) or, worse still annually (I presume none do anymore? INBS were the last that I recall doing this.) then there is no point in making repayments more frequently.
 
My son gets paid weekly and recently requested AIB to deduct mortgage weekly. It was no problem - just requested in writing. It makes sense to pay off weekly rather than monthly, after all, you only pay interest on the remaining balance. The amount saved may seem small initially but over 20/30/40 years it certainly accumulates into quite a saving.
 
When making accelerated mortgage repayments make sure that the lender understands to apply the capital repayments immediately - e.g. to use the capital part of a weekly repayment to reduce the capital balance outstanding and not (for example) wait until 4-5 weekly repayments have been made before applying them as if a single monthly repayment had been received! Just in case any lender might try to do this by default...
 
hmmm i was with PTSB last year and when i requested to pay my mortgage every two weeks, i was tols they only accept monthly payments...

anyone know if they have changed this?
 
They told me the same thing. Apparently their 'system' didn't allow it.

So I changed to NIB for a margin over ECB of less than half they were charging :cool:
 
I'm paying my mtge fortnightly with PTSB for the last 2 years - no problem setting it up.
 
you can calculate how much your increased payments will affect your interest repayment/term here http://www.jeacle.ie/mortgage/

this dosent seem to show any saving in interest from bi-weekly payments. When you select this option it simply halves the calcs. Does someone know the difference in interest on 335k mortgage? (not accounting for inflation) Just the simple difference.
 
Did you read the instrucitons?
Monthly/Bi-weekly payments - Limited support for bi-weekly mortgages is present through this option. When Bi-weekly payments are selected, an extra half-monthly payment is made every six
Click to expand...
 
That dosent make sense clubman. i know its limited support. Again, does anyone have an idea on the difference in interest? It seems like it should be high-ish over 35 years but I wonder why more people dont do it.
 
It does make sense. Say your normal repayments are €1K p.m. = €12K p.a. If you instead pay €500 every fortnight then you pay €500 x 26 = €13K p.a. Karl accounts for this by making an additional half monthly payment of €500 each 6 months. This adds up to the correct total annual repayment amount but it is not applied to the interest as it would actually be in practice. That's why he calls it limited support.

Most people don't do it because it's hassle or they don't know.
 
Clubman! I am aware of this extra payment!! It is not applied to interest! I KNOW!!!! Stop rehashing please. Is there any other calculator out there that will show the interest differnce on monthly v bi-weekly mortgage payments? Perhaps if you have time Clubman!?? ;)
 
I just put in €400 prepayment per month for the duration of my mortgage starting in month 36 and it knocked 14 years off the mortgage. That is unbelievable.
 
Same as an "over" payment. Basically a capital repayment not scheduled according to the original loan term. A chunk of money that comes directly off the capital owed as opposed to your normal repayments which are split into interest and capital amounts. Does that make sense to you?
 
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