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Are you sure about that? In general making repayments as frequently as possible can save significantly on overall interest costs. As long as the lender is calculating interest at least as frequently as the repayments. For example if the lender calculates interest monthly (as I think some still do) then there's no point in making repayments more frequently than monthly. Thankfully many lenders calculate interest daily these days so making repayments more frequently than monthly can yield significant savings. Basically because you are chipping away at the capital more quickly. This is the principle on which current account mortgages work. You can probably estimate the potential savings attributable to making two repayments a month rather than one (where the total repayment in a month is the same) using Karl Jeacle's mortgage calculator. Note that if your normal repayment is €x then you repay 12 x €x in a year but if you pay €x/2 fortnightly then you will pay 26 * €x/2 = 13 x €x so that alone would result in additional interest savings because you are paying more!bearishbull said:not true,not much anyway
In general accelerated mortgage repayment (through more regular than monthly repayments where your lender calculates interest more frequently than monthly, increased monthly repayments and/or lump sum capital repayments) will always save you (often significant amounts of) money in interest charges that you avoid and reduce the effective term of the mortgage (thus also saving you mortgage protection life assurance premium costs later on). If you have no higher cost debts than your mortgage, don't need the money for anything else and won't end up borrowing at higher than mortgage interest rates once the mortgage is reduced/cleared then you could do a lot worse than use spare money to reduce your mortgage borrowings.healybrn said:I mean pay half the normal monthly repayment every 2 weeks.
When you say its not much of a saving, does this mean it is not worth doing?
Thanks
My calculations are not complicated and merely designed to illustrate that paying half the normal monthly repayment fortnightly means that you will pay more in any year. More frequent repayments that add up to more than the normal annual total result in a a double (positive) whammy of reduced interest costs and effective mortgage term.2pack said:Ignore clubmans calculation, its too complex.
Assuming that you're not stuck with a lender who is still calculating interest monthly or, worse still, annually (not sure if anybody still does this - were INBS the last to persist with annual interest calculations?).2Pack said:Mortgage disappears way faster
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