Weekly or Bii monthly mortgage repayments

[Father ted]

We are considering the option of Bi monthly mortgage repayments or even weekly repayments if ICS have that option open to customers.
What are the key advantages if we go for these payment options?

 

[wbbs]

If interest is calculated daily then it reduces slightly the amount of interest you pay as your balance goes down twice a month or weekly, saving depends obviously on amount and rate.

 

[twofor1]

What are the key advantages if we go for these payment options?

There is no big saving to be made simply by paying fortnightly or weekly.

Using the example of €100K @ 4% over 20 years total repayments are;

Monthly - €145,435.20

Fortnightly - €145,350.40, a saving of €84.80 over the 20 year term.

Weekly - €145,308.80, a further saving of €41.60 over the 20 year term.



However if you pay half your monthly payment every 2 weeks you are then making 13 payments annually instead of the required 12 and the savings are more substantial.

Again on €100K @ 4% over 20 years total repayment would be €139,823, a saving of €5,611 and the term would be reduced to 17 years, 9 months.

 

[Karl1]

Can the bank prevent one from switching how the mortage is paid ie make 2 payments per month rather than 1?

 

[emeralds]

Can the bank prevent one from switching how the mortage is paid ie make 2 payments per month rather than 1?

We are on a tracker with Bank Of Ireland and have been paying every 14 days for the last 3 years - no issues at all..all done by email.

 

[bugler]

Just so everyone is clear, this is not some magic trick that costs you less money. You are simply paying more than you are obliged to. As with any form of overpayment this reduces the cost of credit.

One of the newspapers not that long ago ran an advice piece along these lines and then subsequently spent considerable effort rowing back and making clear that this isn't some administrative trick everyone should do at no cost.