Mortgage Glossary

Some mortgages accrue interest on an annual basis and others accrue on a monthly, biweekly or even daily basis. This has a profound difference on the total amount of interest paid as you benefit from any reduction in the capital amount as the year goes on with monthly, biweekly or daily interest. For example, 5% annually on £100,000 amounts to £5,000 a year in interest charges, 5% monthly on £100,000 amounts to 0.05/12(£100,000) = £416.67 a month.