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Interest Calculation

The frequency with which mortgage lenders calculate the outstanding balance on mortgages – annually, monthly or daily – is an important consideration if you have a repayment mortgage.The annual calculation systems of traditional mortgages mean that you are paying interest on capital repayments already made during the course of that calendar year.The daily or monthly interest calculations used with flexible mortgages enable payments (and overpayments) to have a quicker impact on the outstanding balance. Other things being equal, daily or monthly as opposed to annual calculation saves borrowers money.