Is my interest calculated daily?

By THIS IS MONEY
Updated:

 

My mortgage company was taken over by another company in 1992. I have just noticed that on my original mortgage document my interest was calculated daily. Is there any way I can work out if the new company are doing the same, without contacting them at this stage. PG, East Kilbride.

David Hollingworth, of mortgage brokers London & Country, says: The terms of your mortgage should not have changed when your company was taken over. But in general, a daily interest payment scheme will work out slightly cheaper than the same deal with annual interest payments because you get the benefit of the capital being paid off daily rather than at the end of the year.

Though it is not a big difference - daily rates usually only save you about £5-10 a month. But to find out if you are paying daily or annually you need to know your exact balance to be paid off, the term, and the interest rate.

If you know all these you could possibly work it out using a loan calculator - you may be able to find one that goes into this depth on the net but not all do - most work on an annual basis only - but it would be all-but impossible to do yourself as it is so complex.

If you cannot find a calculator, try asking mortgage broker. But why not just ring the mortgage lender and ask? Don't worry about this - lenders don't mind and you are right to check if in doubt.

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