Paying mortgage weekly?

S

staunton

Registered User
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Hi all just a quick question am considering paying my mortgage weekly as opposed to monthly.
My other half has been told that this helps clear your mortgage earlier.
Was wondering is this the case or if it is the case is the difference negligible.
Thanks
 
In order to save interest costs and pay off your mortgage quicker you should pay off as much as you can as soon as you can. If you get paid monthly, then make a payment as soon as your salary comes in. If you are paid weekly and your lender is willing to accept weekly payments, then doing so will save interest costs (assuming interest is calculated daily by your lender) when compared to saving up and making an one equal value payment later in the month.
 
Also, if you enter the arrangement thinking "Every 4 weeks I'll pay off the same amount I would have paid off per month previously" you will pay off the mortgage quicker.

Say mortgage = 1000 per month
So you'd pay off 12000 per annum

If you pay off 250 per week you'll pay off 13000 per annum (250 * 52)
 
staunton said:
Hi all just a quick question am considering paying my mortgage weekly as opposed to monthly.
My other half has been told that this helps clear your mortgage earlier.
Was wondering is this the case or if it is the case is the difference negligible.
Thanks
Click to expand...

That is true. But there is no financial magic. You are making 13 payments per year instead of 12.
 
Thanks very much for advice.
My broker calculated my annual repayments and divided by 52 so I'm not paying back extra money just paying a little earlier every month.
So I presume the difference isnt worth a whole lot over the life of the mortgage!( 30 years)
Anyone know of a way to calculate this am very curious as to how it would be done.
Thanks again
 
Camry said:
That is true. But there is no financial magic. You are making 13 payments per year instead of 12.
Click to expand...
You are referring to camel's comment above. I don't think the OP was referring to actually paying anymore off rather the timeliness of the payment affect the amount of interest acrued. i.e. same amount payed off over a year

I have heard this discussed before with different parties arguing whether it makes a difference or not. Would be interested to know if it does make any difference. I suppose it can vary from institution to institution depending on how they calculate there interest
 
groom said:
don't see where you can alter payments to weekly with this calculator
Click to expand...
Apologies, I remembered using it on a previous similiar discussion... but that was for forthnightly payments (which the calculator does allow under the "settings") not weekly.
 
Satanta said:
Apologies, I remembered using it on a previous similiar discussion... but that was for forthnightly payments (which the calculator does allow under the "settings") not weekly.
Click to expand...

All the benefit comes from the increased capital repayment. Only the smallest effect comes from compound interest effects.

Here is an example (all @5%):

€100,000 can be repaid over 25 year with monthly repayments of €584 (=134.9 weekly).

Paying €134.9 weekly repays €100,000 in 1,305 weeks. That is 25 years (includng leap year affects)
 
Thanks again just got me curious.
Couldn't figure out how it would save me money.
My girlfriends friend was told by her bank manager that it would save her 30k over the course of her mortgage this way but I presume he must have meant increasing the total annual payment.
Thanks again everyone
 
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