Hi Zeb,

Thanks for the reply. I think you've given very good advice. Especially when you work out the difference in interest. That really hit home seeing 78 a month!

THanks again - I think I may well go for the lower interest rate (with the monthly interest calculation)

R

You are right that daily and monthly calculations wil have an effect on your repayments.

A monthly calculation means that your interest is calculated on a monthly basis which isn't bad but if you make your pament on the 1st of the month and it is recalculated on the 15th of the month but this does mean that you have from the 1st - 15th paying interest on a balance that is calculated from 2 weeks before your last payment.

If you have a daily calculation then the interest is recalculated on a daily basis so this means that you make your payment on the 1st and it is recalculated on the second meaning that you are imediately paying interest on the lower balance for the next 30 days.

While this may not make a masive difference it will make a difference to the overall cost of the mortgage repayment.

I would have to say though that in this case with a difference of 0.40% between the two rates you have offered it is the interest rate that would make the most significant difference.

£230,000 @ 3.59% = £688 per month (£8256 per annum)

£230,000 @ 3.99% = £764 per month ( £9168 per annum)

hese figures are based on interest only, the repayment figure for both withy be pretty well identical

If the whole mortgage for the full term was based on daily and monthly differences it would be worth investigating but as you are likely to change mortgage and probably also the provider in 2 years it is not going to make nearly as much difference as the difference in interest rate between the 2 products.

£78 per month is a full tank of petrol you are saving every month, its a weeks shopping, 6 months car tax...........

In this case I think I would go with the monthly rate and make the saving every month

Hello,

I am currently looking at two mortgages but am not sure which is the better.

There is a 5 year fixed with First Direct which is 3.99% It caclulates interest daily.

The second one is a 5 year fixed with the PostOffice which is 3.59% but its interest is calculated monthly.

How can I work out which is cheaper for me? The Post Office one has a lower interest rate but does the monthly calculations affect this.

The sums involved are large (+230,000) so I want to make sure I get this right.

Has anyone got the equations for each calculating interest either monthly or daily?

Thanks