Personal Finance

Per Diem Interest on Mortgage?

  • Last Updated:
  • Oct 3rd, 2014 10:01 pm
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[OP]
Sr. Member
Dec 19, 2009
701 posts
112 upvotes
Ottawa

Per Diem Interest on Mortgage?

I'm looking to switch the payment frequency on my mortgage from monthly to accelerated bi-weekly. When I go to make this change online with my lender it tells that the new frequency will take effect as of Oct. 22...but then I can request to change that date (I want it to match up with my pay day). But when I switch it until Oct. 31...it tells me that "per diem interest will be charged for each day after Oct. 22 until the new frequency start date selected".

What does this mean?
3 replies
Newbie
Oct 15, 2009
87 posts
43 upvotes
Kanata
That you'll still be charged daily (per diem) interest charge for the dates in between the period change.
[OP]
Sr. Member
Dec 19, 2009
701 posts
112 upvotes
Ottawa
badcoffee wrote:
Sep 23rd, 2014 10:10 pm
That you'll still be charged daily (per diem) interest charge for the dates in between the period change.
That is no more interest than I would be charged if I was still doing monthly payments, correct?
Member
Mar 5, 2013
495 posts
118 upvotes
Ottawa
Because you're switching the period, the bank is saying that the portion of interest charged in your first payment will include 9 extra days of interest because of the change of date to the 31. For the following bi-weekly payments, the interest will be calculated on 14 days.

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