Monthly interest payments add £7,500 to mortgage warns Halifax

Posted: 23 Nov 2006 10:51:37 GMT

Homeowners may end up paying as much as £7,500 over the odds in interest payments over the course of their mortgage if it is accrued monthly or annually, claims Halifax

Homeowners may end up paying as much as £7,500 over the odds in interest payments over the course of their mortgage if it is accrued monthly or annually, claims Halifax.

Most mortgage lenders in the UK have switched their interest calculations to a daily basis over the past five years but at least 17 have not done so.

The large difference is because calculating interest daily means that the amount of debt falls every 24 hours, rather than once every seven or 31 days.

This means that the original debt, and the interest payable on it, falls more rapidly than it would otherwise.

"Daily interest saves customers a lot of money over the life of their mortgage and should not be overlooked when they are looking at which deal is the best for their circumstances," said Mark Heaton, head of mortgages at Halifax.

"The clear message for borrowers is 'look beyond the headline rate'. Your mortgage should be offering you the best possible long term value."

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