When Is Interest Calculated on Interest on a Mortgage?

youngchinaman on 03/02/2020 - 15:08

Hi, wondering if there's someone out there in banking or mortgage broking world that can answer this question.

Interest on your mortgage is calculated daily. If you have your salary paid into your offset account on a Monday, will the interest be calculated on the amount on the Monday or is it required to be a full day of the money sitting there?

Following on from the above, if you were to shift money out via payID and pay back via payID that same day, would interest be calculated from the next day or it doesn't matter and is based on the account balance at the close of business.

Just curious to know.

Thanks

Financial

Comments

  • DashCam AKA Rolts on 03/02/2020 - 15:33

    What did your bank say when you asked? Have you looked online, at the bank's info or phoned someone at the bank? Spoken to your loan broker?

    • iforgotmysocks on 03/02/2020 - 15:34
      +6

      That seems like work.

      • dealymcdealerson on 03/02/2020 - 19:53

        You wouldn't believe it but literally every single search result, website and person all told them to ask ozbargain.

  • DashCam AKA Rolts on 03/02/2020 - 15:35
    +2

    OzBargain valet service is off line today.

  • Ocker on 03/02/2020 - 15:38
    +3

    The Australian banking system has not yet introduced intra-day based interest accounting.
    Therefore interest is charged/paid based on the end of day balance.

  • Skramit on 03/02/2020 - 15:39

    Interest will be calculated at the same time each day e.g. 11:59PM or something like that (just an example). So whatever the offset balance is at that time each day will be what it uses as the calculation.

  • Seraphin7 on 03/02/2020 - 15:40

    All interest calculations are based on the balance at close of day. Money moving in/out through the day has no bearing … it's all on what's there at the end.

  • Donaldhump on 03/02/2020 - 16:07
    +3

    i would have thought the lowest balance on a given day to prevent intraday trading (if its even possible) to try and beat the clock, but everyone here thinks is end of day so ill go with that

  • yohankorea on 03/02/2020 - 17:31

    I am with Macquarie for my mortgage. They treat all daily cashflows as if they were received/paid at the beginning of the day. They use the end of day closing balance to calculate the interest for the day. Eg. Opening balance $2000, cash inflow (salary) $1000 then interest is on $1000 only.

    • youngchinaman on 04/02/2020 - 12:14

      I'm with Macquarie too. I called them just to clarify. It's closing balance at 5.00pm that day not at 11.59pm.

      • Porker on 04/02/2020 - 14:26
        +4

        Why didn't you just do this in the first place?

        • NoPetNoKid on 05/02/2020 - 22:19

          It was a test and everyone who participated is passed. Next grade please !!

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