Mortgages

Calculating interest

Interest can be charged on a daily basis and calculated either once a year, known as Annual Rest, or every day, known as Daily Interest.

Annual Rest Interest
Interest on your mortgage is calculated and charged on a daily basis and is based on the previous years balance eg interest for 'year 2' has been based on the balance owing at 31st December 'year 1'. Interest accrues to your mortgage at a daily rate, we divide your annual interest by 365 and the amount charged depends on the interest rate prevailing on each day of the year. The table below may help to explain this.

Your monthly repayments cover the annual interest, and if you have a repayment mortgage they will also repay part of the actual loan.

Daily Interest
Your interest is calculated on the outstanding balance each day, so as your mortgage balance falls, the amount of interest charged falls immediately. However, if your mortgage balance increases, for example, if you missed a monthly payment, the amount of interest charged will increase immediately.

Or if you completed part way through the year

If you were to take out a new mortgage with us today it would automatically be on a daily interest basis, as all our new mortgages are calculated in this way.

If you are unsure how the interest is calulated on your mortgage please call us on 0845 121 7912* . Please have your account number ready when you call.

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