From: John Boyle 
Newsgroups: uk.finance
Subject: Re: Mortgage interest calculation -- daily interest
Date: Wed, 11 Apr 2007 22:35:28 +0100

In message , Tim 
Woodall  writes
>For the first month there is an opening balance and one cashpoint
>withdrawal. The interest rate was 5.1% for 05/05/04-06/05/04 and 5.35%
>from 07/05/04 to 25/05/04.
>
>Doing the calculation Interest=Amount outstanding * IR/365 and I get a
>total of 209.36 interest - The statement says "The total interest on all
>your borrowing covering these periods is 209.36. We will collect this
>from your account on 21/06/2004.
>
>I then did the same calculation for the following month. This time my
>calculation gives 302.54 while the actual amount charged is 303.38. The
>only way I can make these balance is to charge interest on the 209.36
>interest from the previous month on every day from 25/05 to 21/06 when
>the amount is actually deducted from my balance. Ditto for the following
>month.

Yes, some lenders who delay the application of accrued interest after 
the day the accrual ceases still accrue interest in the interest accrued 
from the day it falls due until the day it is debited to the main 
account.

It still has the same effect as if the account were debited at the end 
of the charging period.
-- 
John Boyle