From when do you get charged for mortgage?

MajorTom_2

Hi guys,

I'm hopefully completing on my first house purchase at the end of this month. I'm buying from a vendor buying a new build and have a 10 days notice for completion (total deadline of 9th July).
I'm told things are ahead of schedule and we should complete before the deadline.

I would like my solicitor to draw down the mortgage money sooner rather than later so there are no delays my end (the posts regarding the mortgage lenders having second thoughts at the last minute are too scary!!), my question is if I do complete on say 1st of July and the mortgage is requested this Monday (14th June) will my first mortgage payment say on 1st Aug be charged from this Monday or when I complete (1st July) ???

Cheers,

MT

Keith

You'll be charged interest from the day the mortgage is drawn. When we bought we arrived to a letter from NR stating the interest due from completion day to our first payment, this was added to the loan as we didn't expect it

MajorTom_2

So just for clarity (forgive me slowness here, its late and been a long day!!), If the mortgage is requested this Monday (14th June) and my first payment is the 1st August, I will pay 6 weeks(ish) of mortgage payment, e.g. £1000 per month mortgage = £1500 first payment? even if I don't complete until 1sy July?

Cheers,
MT

keith1950

Hi, based on when I last completed it would be one month in advance plus 6 weeks interest so might be nearer to £2300.

MajorTom_2

One month in advance??? surely not? If I was renting then fair enough! Just out of interest who is your mortgage provider?

Cheers,
MT

DVardysShadow

MajorTom wrote: »

So just for clarity (forgive me slowness here, its late and been a long day!!), If the mortgage is requested this Monday (14th June) and my first payment is the 1st August, I will pay 6 weeks(ish) of mortgage payment, e.g. £1000 per month mortgage = £1500 first payment? even if I don't complete until 1sy July?

Cheers,
MT

Yes. The lender will charge interest once they transfer it, for the privilege of letting it sit in your conveyancer's client account.

opinions4u

1) This is a question that you absolutely MUST check out with your broker / lender. Different lenders may have slightly different policies.

2) Interest is usually chargeable from the date the mortgage completes, not the date that the funds are released to the lender - but again, you need to check this out.

3) Mortgage payments are usually due in advance. So if you complete in mid-June and don't make any payments until 1st August I would expect you to have two and a very approximate half monthly payments to make, covering June, July and August. More likely you will have a payment in July to cover June interest and July monthly payment, followed by normal monthly payment in August.

4) Many insurance premiums will expect you to pay two months up front as well. So you really do need to clarify with all your providers what money is going to be taken and when. Then budget accordingly and have a "reserve" in your current account to cater for the unexpected.

DVardysShadow wrote: »

Yes. The lender will charge interest once they transfer it, for the privilege of letting it sit in your conveyancer's client account.

Many lenders won't charge the customer interest until completion.

dunstonh

month in advance??? surely not?

Being told that your first mortgage payment could be up to the equivalent of 2 months maximum is one of the major key points that a mortgage adviser is told to tell their client as its one of the most common causes of complaint. Did your mortgage adviser not tell you this?

As mentioned above, most mortgages are paid in advance. So, your first payment has the month ahead and it has the period of catch up from when you complete. So, if your payment date is say the 1st monthly and you complete on the 15th of June, your first payment will be the 1st July and it will be 1 month, 2 weeks worth (1 month ahead plus the two weeks you had the money). In the same basis, completing on say the 28th June would see almost two whole payments taken on 1st August.

Your mortgage adviser should be going through this with you.

MajorTom_2

Thanks for the info guys, I've done some digging and I "believe" interest is charged from when the mortgage money is requested and the payments are made a month in arrears. My mortgage is with Natwest.

Cheers,
MT