Mortgage Interest calculation

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Dermot

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Just checking on mortgage interest charged on a mortgage.
I am paying off Interest and Principle on a mortgage with AIB.
On 16/03/2015 I was charged €800.27 interest.
On 16/06/2015 I was charged €838.92 interest.
No change in the Interest rate in the 2 quarters that I am talking about.
My question is despite reducing the amount over the 3 month period ending 16/06/2015 I have been charged more interest.
I am aware that Interest is charged on a daily basis but I cannot figure where there are more days in the quarter ending 16/06/2015 in comparison with quarter ending 16/03/2015.
Maybe I am missing something obvious.
 
I don't think February explains it.

up to 16/3/2015 they charged approx 8.89 interest daily.
up to 16/6/2015 they charged approx 9.19 interest daily.
 
Hi Dermot

Although the interest was charged to your account on 16th March - it might have been calculated as of a different day e.g. as of 28th February. That would be 90 days vs. 92 days, so it would still not explain it.

You should ask AIB for a printout of the interest calculation.

The reduction in principal is unlikely to make a significant difference unless you are close to paying off your mortgage.
 
I have noticed the exact same on my AIB mortgage in that period (Mar to Jun). I. too, am wondering why the strange rise in that period. This is the same in the last few years btw. Maybe they charge interest from Jan 1st to 15th March at the start and then March 15th to Jun 15th and so on ?
 
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Interest is charged quarterly by all banks AFAIK. Interest is accrued on a daily balance as per Brendan's post above. These should be no significant changes in the quarters other than perhaps February. Send your query directly to the Bank if you feel that you are being over-charged. It's unlikely as all charges are calculated by the computer system and any differential in a quarter should show up as a reduction in the following quarter. Perhaps check the charge again in September and if the amount has now reduced then you would need to question it!
 
Thanks to everyone who contributed. Quite busy at the moment but I probably will question it as suggested and will come back with their response. I take the point about it being calculated by computer.
 
Update:

I asked them for an explanation of calculation and it's because of the first three months being 90 days (in my case 15/12 to 15/03 31 + 31 + 28) and the next three is 92.

I worked it out as follows and it is pretty accurate.

Take the oustanding amount on a given date when you have paid mortgage. i.e. 15 Dec.
Multiply by interest rate say .04 to get the interest due.
Divide by 365 to get daily rate and multiply by how many days till your next monthly pay date.
Repeat the above using the new figure.

Example


15th Dec - 100,163.59 @ 4.4% = 4407.20/365 = 12.075 per day x 31 = 374.31

15th Jan - 99,334.12 @ 4.4% = 4370.70/365 = 11.975 per day x 31 = 371.225

15th Feb - 98,504.65@ 4.4% = 4334.20/365 = 11.87.45 per day x 28 = 332.4866

15th March interest due 1078.02

15th Mar - 98,753.48 @ 4.4% = 4345.15/365 = 11.905 per day x 31 = 369.055

15th Apr - 97,924.01 @ 4.4% = 4308.66/365 = 11.8045 per day x30 = 354.135

15th May - 97,094.54 @4.4% = 4272.159/365 = 11.7045 per day x 31 = 362.84

15th June interest due 1086.03
 
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