Two Red Shoes Copyright © 2016 All rights reserved. Call on 02 9002 0380, 0404 494 929, email us  or 'old school' fax 02 9002 0381

Jarrett Group Pty Ltd atf Jarrett Group Discretionary Trust trading as Two Red Shoes hold Australian Credit Licence No: 428614 and are members of an external dispute resolution scheme. Details of our complaint resolution process can be found here or please see our credit guide. All information contained on this site is general information only, and does not take into account your particular financial situation or needs. You should consider your personal objectives, financial situation along with the recommendations of your trusted advisors.

Sydney mortgage broker operating in

  • The Hills District

  • Hawkesbury

  • Nepean 

  • North Shore

  • Penrith

 

  • Camden

  • Baulkham Hills

  • Lower Blue Mountains

  • Parramatta

  • Hornsby

 

  • Windsor and Richmond

  • Rouse Hill

  • Hunters Hill

  • Gladesville

  • NSW Central Coast too!

  • Facebook Social Icon
  • Instagram Social Icon
  • Twitter Social Icon
  • YouTube Social  Icon

Call us today on 02 9002 0380

When is interest calculated on your home loan?

March 16, 2017

Home loan interest is calculated deep inside the computer systems of your favourite lenders based on daily balance of your loan (less any redraw or money sitting in your account) and charged in arrears (after the fact) at the end of the month. You might see this term "interest charged" on your statement as a separate item or it may be included in the repayment they draw; different lenders, different systems.

 

If you're selling or refinancing you'll see another term pop up, 'accrued interest', this is basically the interest that the computer has been calculating behind the scenes between your last repayment and today. It's not extra interest, and if you settled the moment after you paid your repayment you wouldn't have any accrued interest at all. If your payout figure includes accrued interest it simply means there's a repayment in your account that won't go out because of the change of loan. 

 

The one you don’t want to see is ‘default interest’ that means there’s been an issue and it needs to be rectified ASAP. Even if you’re having an issue where the loan repayment goes out a few days after its supposed to this will look really bad to any potential lender you want to talk to about refinancing, and, in an era of positive credit reporting it will be recorded on your credit file as a negative ranking if not now then in the future.

 

In a perfect world I would say always keep spare cash in the account enough to cover the repayment or alter the repayment date (or your pay date) to make sure the money is always there. Default interest is often accompanied by a nasty fee and is also typically 2%-3% above your standard interest rate so it pays to keep on top of this.

 

In any case, do your best, and reduce the balance as soon as you can to save buckets of interest down the track remembering that if they’re calculating interest daily then the sooner its in the sooner its saving.

 

 Article for The Western Weekender

 

Please reload

Featured Posts

Why I love being a mortgage broker

August 25, 2016

1/3
Please reload

Recent Posts
Please reload

Archive