Broken interest - what is it?

laxeylady

We have been told its best not to move till the end of a month because otherwise we will incur something called broken interest on our first mortgage payment. Not a clue what it is though.

Welsh_Totster

probably a full monthspayment and part of a months payment to be paid in one go as your first payment which can be quite big. But dont quote me on that!

DVardysShadow

Welsh_Totster wrote: »

probably a full monthspayment and part of a months payment to be paid in one go as your first payment which can be quite big. But dont quote me on that!

Sounds about right. But if you are moving from rented, you could incur another whole months rent just by trying to avoid a "broken" payment. You need to look at your cash flow.

But as ftb, you could incur wrath from the rest of a chain it you delay for this reason.

Doozergirl

It just sounds like an irrelevance to me. It might be something to bear in mind but it's no reason to delay moving day. Wherever you are you have to pay rent or mortgage for that month. In addition to what DVardysShadow has already said, if you already own a house then you will have paid your month upfront anyway and would be due a refund from the date you move to the end of the month, so it's all swings and roundabouts if you have a heavier month on the new mortgage.

You don't lose any money, you just might have a heavier repayment the first month - frankly, if you can 't cope with a bit more on the first month then you should be questioning whether you could afford to move at all!