Paying a mortgage weekly or fortnightly rather than monthly ?

copacetic

murphm45 wrote: »

They took their time with that, and even there correction doesn't specify that an extra monthly payment is being made every year, and this is where the so called "saving" is coming from.

it says pretty much exactly that

effectively making an extra four weeks’ payment each year

Abelloid

jimmycrackcorm wrote: »

I moved my mortgage payment to the start of the month instead of the end - so I guess I'd lose out by splitting that into bi-monthly payments.

No, you'll still finish paying it off 3 1/2 weeks early...

murphm45

copacetic wrote: »

it says pretty much exactly that

That's mentioned in the comment at the end not the article proper this is what i was getting at. Sorry about any confusion, and thanks for pointing that out.

smcgiff

murphm45 wrote: »

Not to be smart but it doesn't. In the example in the times (300k over 30 years) the total saving is only about €600 if you switch from monthly to half monthly. the APR in the example is 5.11% this gives and equivalent monthly rate of 0.42% per month or 0.21% per half month. if you do the calcs you'll see that over 360 months the loan is fully repayed and it takes about 718 half monthly ones to repay the loan with the monthly payment halved. so all you've done is reduced the term by a month. not the 2 and a half years the article suggests

Howdy,

Should have clarified - I wasn't saying the article is correct, I didn't verify it, but clarifying what he was implying. It does sound too good to be true, but I've not modeled it.

<edit> from what I've been reading here it was too good to be true. The IT have been flagging this must read article - I'm morto for them!

Twatter

Richard tea wrote: »

Bi-weekly, twice monthly I was onto my bank and I can change my repayments by simply sending them in a letter of request. Not sure how to word it though:o The guy from the bank mentioned that its not widely advertised but I can do it. Do I request a change to Bi-weekly, twice monthly and do I have to state that I want it payed off the principal ammount

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paddy147

Ah sure next thing you know,we will have experts telling us how we can all grow money trees in our back gardens.

Typical of modern day Ireland,they even fcuked this mortgage reduction thing up.Give false hope to the nation,and then say you got your facts all ixed up.Useless shower these so called "experts" are.

They cant get anything right.

kop77

CONOR POPE....................EAT MY SHORTS!!!:D:D:D:pac:

ifiwasonlyrich

Granted, it may seem you may only save a few 'hundred euro', but calculate that over the life of the loan. The easiest way to do it, and least hassle is by getting YOUR personal mortgage account loan number, i.e. sort and account number. Lodge directly into that account every 2 weeks (or every week like I'm looking into). You have to make sure the bank are aware of what your doing, and accept it. No point lodging if they don't put it off your loan or capital. So, lets say your mortgage repayment is 800 pm, whenever your due date for payment is (7th for EBS), lodge 400 the first half of the month, and a further 400 by the 7th of the following month. Once this is IMMEDIATELY applied to your loan, you will save. Interest rates are calculated daily, so if you lodge weekly/fortnightly, your obviously bringing down the interest. Its not rocket science, just common sense. Pity I didn't figure this out earlier. Some have quoted on paying bi monthly already with other banks, but if its only going into a holding account, and then applied at the end of the month, or start, its of no benefit to the customer.

Sir Shankalot

paddy147 wrote: »

Ah sure next thing you know,we will have experts telling us how we can all grow money trees in our back gardens.

Typical of modern day Ireland,they even fcuked this mortgage reduction thing up.Give false hope to the nation,and then say you got your facts all ixed up.Useless shower these so called "experts" are.

They cant get anything right.

what has boiled my blood even more than the original nonsense published yesterday is the masked apology in the article entitled "Mixed messages on paying mortgages fortnightly" page 8 today's IT. Pope makes out like he is waging war on behalf of the Irish mortgage paying public when in actual fact the only reason "banks were inundated with calls" was due to fact he promised them something for nothing!!

zooleire

he's spotted his mistake!

http://www.irishtimes.com/blogs/pricewatch/2011/04/05/i-made-a-mistake/

Twatter

Did anyone hear him on Ray D'arcy this morning? I heard he was going to be interviewed but I had to go out and missed it. Was he contrite?

kop77

Twatter wrote: »

Did anyone hear him on Ray D'arcy this morning? I heard he was going to be interviewed but I had to go out and missed it. Was he contrite?

Yup... but still saying you should pay bi-weekly to shorten your loan.. .. but it will cost you extra in the year. What I'm doing is paying a little every month into a high % savings account and after a couple of years I'm going to pay it off my mortgage. Same thing me thinks?

Yakuza

Fair play to him for sticking the lámh suas.

kop77 wrote: »

Yup... but still saying you should pay bi-weekly to shorten your loan.. .. but it will cost you extra in the year. What I'm doing is paying a little every month into a high % savings account and after a couple of years I'm going to pay it off my mortgage. Same thing me thinks?

You might be somewhat better off sticking the money in a high yield savings account (esp if you're on a low rate like a tracker) but personally, as I'm on a tracker that whose rate depends on the loan to value, and by my estimates, I'm on the cusp of moving into the higher rate (as value has fallen in the last several years), so it's in my interest (no pun intended ) to get the loan down.

kop77

Yakuza wrote: »

Fair play to him for sticking the lámh suas.



You might be somewhat better off sticking the money in a high yield savings account (esp if you're on a low rate like a tracker) but personally, as I'm on a tracker that whose rate depends on the loan to value, and by my estimates, I'm on the cusp of moving into the higher rate (as value has fallen in the last several years), so it's in my interest (no pun intended ) to get the loan down.

Yes, I'm on a tracker too, I'm only getting 3.5% on the savings, was 5% but when you take off DIRT I think its more than my tracker rate. I'm still still of the opinion the few quid should be there for a rainy day but as time goes on and hopefully we come out the sh1t storm were in ill pay some off the mortgage.

gaeilgegrinds1

So you don't save money?

Dan_Solo

Are there still penalties for changing the terms of your mortgage? You might even lose more than you'll gain out of this bi-monthly payment thing if there is!

Unwilling

I phoned the bank and tried to change to twice a month. I was surprised by the ease in which they said YES NO PROBLEM I didn't need to send in a form, notifiy them in writing nothing like that.... with the little comment added "we still bill monthly".....................
So I mentioned the article in the paper and he said that the article was retracted almost immediately as it was so inaccurate.
Obviously he said, if you pay twice a month you save a bit on the overall mortgage as you are overpaying by a week or so.
The fact that they bill MONTLY means they calculate the interest MONTHLY so it makes no relevance.
I was a bit peeved by this - why can' t they process them twice a month... grrr they have you every which way don't they.

I can't argue the point much or threathen to MOVE lender as I'm on a TRACKER so they know I'm stuck with them...............

PUT IT ALL UNDER THE MATRESS I TELL YA.....................

Fingers Mcginty

Unwilling wrote: »

I phoned the bank and tried to change to twice a month. I was surprised by the ease in which they said YES NO PROBLEM I didn't need to send in a form, notifiy them in writing nothing like that.... with the little comment added "we still bill monthly".....................
So I mentioned the article in the paper and he said that the article was retracted almost immediately as it was so inaccurate.
Obviously he said, if you pay twice a month you save a bit on the overall mortgage as you are overpaying by a week or so.
The fact that they bill MONTLY means they calculate the interest MONTHLY so it makes no relevance.
I was a bit peeved by this - why can' t they process them twice a month... grrr they have you every which way don't they.

I can't argue the point much or threathen to MOVE lender as I'm on a TRACKER so they know I'm stuck with them...............

PUT IT ALL UNDER THE MATRESS I TELL YA.....................

which bank?

TirEoghain

Here is a calculator I was using with the Commomwealth Bank in Australia.

They have a drop down to change the frequency from monthly to fortnightly.

It would seem by making the 26 x half monthly payments in the year, instead of the 24, you shorten the term of a 30 year loan to 23 years. Well worth the extra 8% payment in the year caused by the extra monthly repayment in my view if you are fortnightly paid.

I can't see the logic being any different in Ireland.

http://www.commbank.com.au/personal/home-loans/calculators/home-loan-calculator.aspx

Abelloid

TirEoghain wrote: »

Here is a calculator I was using with the Commomwealth Bank in Australia.

They have a drop down to change the frequency from monthly to fortnightly.

It would seem by making the 26 x half monthly payments in the year, instead of the 24, you shorten the term of a 30 year loan to 23 years. Well worth the extra 8% payment in the year caused by the extra monthly repayment in my view if you are fortnightly paid.

I can't see the logic being any different in Ireland.

http://www.commbank.com.au/personal/home-loans/calculators/home-loan-calculator.aspx

It's not rocket surgery; pay in extra and reduce the term.

TirEoghain

JustinOval wrote: »

It's not rocket surgery; pay in extra and reduce the term.

Maybe so, but I thought 7 years was a damn good reduction in term for a relatively insignificant fortnightly overpayment. As I'm fortnightly paid, that's what I'll be doing.

Abelloid

Just be aware when you're paid fortnightly but bills go monthly, twice a year you get a 'bonus' pay packet, and these are what you'll be paying off your mortgage.

The Rooster

Unwilling wrote: »

I phoned the bank and tried to change to twice a month. I was surprised by the ease in which they said YES NO PROBLEM I didn't need to send in a form, notifiy them in writing nothing like that.... with the little comment added "we still bill monthly".....................
So I mentioned the article in the paper and he said that the article was retracted almost immediately as it was so inaccurate.
Obviously he said, if you pay twice a month you save a bit on the overall mortgage as you are overpaying by a week or so.
The fact that they bill MONTLY means they calculate the interest MONTHLY so it makes no relevance.I was a bit peeved by this - why can' t they process them twice a month... grrr they have you every which way don't they.

I can't argue the point much or threathen to MOVE lender as I'm on a TRACKER so they know I'm stuck with them...............

PUT IT ALL UNDER THE MATRESS I TELL YA.....................

Whether they bill monthly or fortnightly makes practically no difference.

Paying twice a month (24 payments) makes very little difference. Paying biweekly (26 payments) will make some difference. Which, as has been said by others, is hardly rocket science.

daithi55

heres something worth looking at peeps 200 euro extra a month can knock 10 years of my 30 year mortgage... id save 33,000 over my mortgage with bank of ireland http://personalbanking.bankofireland.com/mortgages/mortgage-calculators/overpayment-calculator/

BuffyBot

Zombie thread.