Those looking to borrow for the purchase of a new property are being advised to find mortgage lenders that calculate interest on a daily rate rather than monthly or annually.
According to Halifax, some 20 mortgage lenders charge interest on a monthly or yearly basis, which can incur higher repayment costs for borrowers. This is due to interest being calculated on the outstanding balance for the previous month or year and not reducing the debt until the end of the period.
Mortgage lenders which charge interest daily, however, take into account any payment made towards the loan immediately, thus reducing the total debt and chargeable amount of interest.
Halifax is recommending that people looking to compare rates - such as those for commercial mortgages, business mortgages or mortgages for holiday homes - should look "beyond the headline rate" of deals offered by mortgage lenders, in order to get the most beneficial deal in the long-term.
"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.
"Your mortgage should be offering you the best possible long-term value," he added.
Mortgage lending is one of a number of financial services offered by Halifax, alongside credit cards, insurance, loans and investment advice.
Daily rates from mortgage lenders save money, says Halifax
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Daily rates from mortgage lenders save money, says Halifax
Thu, 23 Nov 2006
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