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  • Every day, interest is calculated based on the remaining balance on your mortgage.
  • However, this is not added to the balance every day, instead the total months interest is added to the mortgage once a month on the interest charging date – this is the date your mortgage completed.

When your payment date is after the interest charging

  • Until your payment is received, daily interest is calculated on a balance that now includes last months’ interest.
  • Your monthly payment won’t change so more of your monthly payment is needed to repay interest, leaving less to repay any capital that month.
  • However, events occur throughout your mortgage, such as rate changes, which will trigger an automatic recalculation of your payments, and capture any extra interest incurred to that point. If none of these events occur, you may be left with a balance at the end of mortgage term which means you will pay more overall throughout the life of the mortgage.

When your payment date is before or the same as the interest charging date

No additional interest will be charged, as your payment is received in time to pay off the previous months interest, which will be applied on the interest charging date, with any extra money received reducing the mortgage balance (“capital”).

When is my monthly interest charging date?

  • The interest charging date is set at the same date of the month that your mortgage first completed and cannot be changed i.e. if your mortgage completed on the 10th of the month, your interest charging date will always be on the 10th of each month.
  • This is the date of the month that interest is added to your mortgage balance, making the balance higher.

When is my payment date?

  • This is the date that you chose to make your monthly payment or could be the date automatically set for you when your mortgage completed originally.
  • You can pay on any date of the month, providing a full payment is received every calendar month.
  • If you change your payment from the end of the month to the start of the next month then you will need to make 2 payments very close together.

What is the impact to me if I choose a payment date after my interest charging date?

  • For Capital repayment mortgages, you will be charged more interest, and may still have a balance at the end of the mortgage term.
  • For Interest only mortgages, you will be charged more interest and your capital balance may increase.
  • A recalculation of payments may then result in you paying more to cover the extra interest charged.

What options do I have if I don’t want to pay extra interest?

You can make your payment date the same as, or before the interest charging date – this is the date your mortgage originally completed.

I no longer want to proceed with the direct debit date change.

Please log back into Manage My Mortgage to complete a new payment date change request to amend this to the previous date.

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