Mortgage repayment monthly/weekly/biweekly?

Richard88 · 23-05-2019 1:54pm #1

Hi.

This is one of these moments where Iv looked into something too much and after speaking with the bank employee confused myself.

Currently paying a mortgage with BOI on a fixed rate of 3%, paid on a monthly basis.

looking to change frequency of payments to either weekly / biweekly (I.e calculating the interest paid weekly rather than monthly)

How would I calculate the amount (if any) I’d save / term I’d reduce the mortgage by, if I were to change to weekly.
Can’t find any calculator online.

Let’s say the mortgage is 170000 and the remaining term is 30 years with a 3% rate?

Or is it not worth the hassle and leave it be?

Anybody able to assist with this?
Thanks!

chases0102 · 23-05-2019 2:38pm

I'd be interested in this too. I had come across something before on the radio, and the figure was impressive as regards overall spending made.

Also I wonder could this type of structure be done in conjunction with overpaying by 10% (max allowed on fixed rate with BOI)

GingerLily · 23-05-2019 3:52pm

Do you want to pay multiples of your mortgage every month?

Wesser · 23-05-2019 4:48pm

is that even possible?

BailMeOut · 23-05-2019 4:55pm

Paying 1/2 monthly every two weeks means you make an extra payment a year. (26 payments = 13 months).

I used to do this but not in Ireland and means your mortgage gets paid off a few years early.

GingerLily · 23-05-2019 5:12pm

BailMeOut wrote: »

Paying 1/2 monthly every two weeks means you make an extra payment a year. (26 payments = 13 months).

I used to do this but not in Ireland and means your mortgage gets paid off a few years early.

Over paying is overpaying, whatever way you look at it, if I over pay up also pay off my mortgage earlier?

drunkmonkey · 23-05-2019 10:14pm

Is the interest on a mortgage compound daily? Have to say it's a good question and if your reducing the balance weekly it would have to make an impact beyond just an extra payment a year.
I'd say the banks knew you'd be born some day and have already put in places measures so it can't be done.

atilladehun · 23-05-2019 10:18pm

My mum used to do this, maybe not in this exact style though. She'd get a few weeks in the year that gave her a bit of a bonus. Paid for school books, Christmas etc.

Richard88 · 23-05-2019 10:19pm

Wesser wrote: »

is that even possible?

Yes. Was on the phone to boi. Can do
Weekly, biweekly and monthly.

Richard88 · 23-05-2019 10:20pm

I had my head around the logic of it but can’t work out how much I would actually save!

Snotty · 23-05-2019 10:20pm

I'm with ebs and this came up, not for this exact reason. I asked them if I can cancel the existing direct debit at the end of the month and instead have one every 2 weeks, they had no problem with it, but I never actually done it.

4ensic15 · 23-05-2019 10:21pm

drunkmonkey wrote: »

Is the interest on a mortgage compound daily? Have to say it's a good question and if your reducing the balance weekly it would have to make an impact beyond just an extra payment a year.
I'd say the banks knew you'd be born some day and have already put in places measures so it can't be done.

Interest on mortgages is accrued daily. Paying more frequently means that interest stops being charged on that amount of money. If the Mortgage is 1k per month and a payment of 500 is made after 15 days there is 15 days interest on 500 saved. There is thus a small saving every month.

Richard88 · 23-05-2019 10:23pm

GingerLily wrote: »

Over paying is overpaying, whatever way you look at it, if I over pay up also pay off my mortgage earlier?

Yes that’s one of the ways it will reduce the term of the mortgage but I think it’s also to do with reducing the amount of interest you pay each year if you pay by the week rather than by the month!

Richard88 · 23-05-2019 10:25pm

4ensic15 wrote: »

Interest on mortgages is accrued daily. Paying more frequently means that interest stops being charged on that amount of money. If the Mortgage is 1k per month and a payment of 500 is made after 15 days there is 15 days interest on 500 saved. There is thus a small saving every month.

Yes. This is a good way of explaining it. Now if only you could do the calculation for me

drunkmonkey · 23-05-2019 10:26pm

This is a good calculator have a look at the Show amortization table
https://www.bankrate.com/calculators/mortgages/bi-weekly-mortgage-calculator.aspx
Makes sense if it suit's you income frequency.

G_R · 24-05-2019 12:34am

Richard88 wrote: »

Let’s say the mortgage is 170000 and the remaining term is 30 years with a 3% rate?

So I worked out the monthly repayments and total cost of credit over the 30 years on the above based on daily compounded interest with weekly/fortnightly/monthly repayments.

Weekly: €165.32pw; €87,893.34 cost of credit
F/Nightly: €303.73pf; €87,967.76 cost of credit
Monthly: €717.06pm; €88,141.49 cost of credit

davindub · 24-05-2019 12:41am

G_R wrote: »

So I worked out the monthly repayments and total cost of credit over the 30 years on the above based on daily compounded interest with weekly/fortnightly/monthly repayments.

Weekly: €165.32pw; €87,893.34 cost of credit
F/Nightly: €303.73pf; €87,967.76 cost of credit
Monthly: €717.06pm; €88,141.49 cost of credit

Had similar but:

Transaction fees (if you don't have a free account) will be 80c per 4 (lose €150 over term) assuming 20c per DD and 40c pm (lose €45) on bimonthly.

Richard88 · 24-05-2019 8:04am

G_R wrote: »

So I worked out the monthly repayments and total cost of credit over the 30 years on the above based on daily compounded interest with weekly/fortnightly/monthly repayments.

Weekly: €165.32pw; €87,893.34 cost of credit
F/Nightly: €303.73pf; €87,967.76 cost of credit
Monthly: €717.06pm; €88,141.49 cost of credit

Thanks,
Looking at that and taking into account davindubs comment on the fees, the saving is minimal.

On the other hand though, should it shorten the term on the mortgage, I.e, slightly overpaying yearly - instead of 12 monthly repayments of €717 you would have 53 weekly payments of €165... (at this point I more or less answered my own question

) so for every 4 years where you pay 53 weeks, you knock a month off your mortgage?

Yourmama · 24-05-2019 8:25am

If you're going to end up paying the same amounts, savings due to frequency will be only few hundred euro over the 30 years. Much better to overpay. Even small amounts will give you great savings in interest.

4ensic15 · 24-05-2019 8:29am

G_R wrote: »

So I worked out the monthly repayments and total cost of credit over the 30 years on the above based on daily compounded interest with weekly/fortnightly/monthly repayments.

Weekly: €165.32pw; €87,893.34 cost of credit
F/Nightly: €303.73pf; €87,967.76 cost of credit
Monthly: €717.06pm; €88,141.49 cost of credit

Interest is capitalised every three months so yopur compounding may not be quite accurate.

GingerLily · 24-05-2019 9:45am

You should pay in whatever suits you best, there isn't significant savings either way, unless your paying down early

JJJackal · 24-05-2019 10:57am

There appears to be no disadvantage to paying every week or 2 weeks - from the above. Can make budgeting easier

Mortgage repayment monthly/weekly/biweekly?

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