Daily Interest Calculation

[apd]

Hi,

I have a tracker mortgage witl AIB. According to their literature :

"
Interest is calculated daily and charged quarterly so you only pay interest on the outstanding amount of your mortgage."


Would this not mean, absent of any interest rate rises, that the mortgage repayment each month should be at least a few pence less every month.

My repayments are identical each month?

Thanks

 

[ClubMan]

Would this not mean, absent of any interest rate rises, that the mortgage repayment each month should be at least a few pence less every month.

No - the repayments stay the same but initially most of the repayment goes on interest and a little on capital but as the capital is chipped away the interest:capital repayments ratio decreases. At the end of the mortgage most of each monthly repayment goes on capital and a little on interest. For example at the very start of the mortgage 99% of the repayment might go on interest and 1% on capital. At the end it would be the other way around. See Karl Jeacle's mortgage calculator's amortisation graph for further explanation.

My repayments are identical each month?

Yes - in the absence of rate changes that is correct.