When is the first mortgage payment due

Made_Without

Post completion?

so if a person completes on the 15th of October when do mortgage payments start and when does the bank send the notification?

Thanks

C*F

HelenDaveKids

We complete on Friday. I understand our first payment is the date we asked for, which is begining of month (1st), however you have to pay an additional payment with the first one, which at best guess i would say is about 2 3rds of monthly payment. No idea why but was expecting it as I knew thats what they did. Makes that first month VERY expensive.

we've already had our bank notification telling us about this.

Made_Without

@HelenDaveKids

Did you receive the bank notification after exchange?

C*F

picardygirl

It will depend on which date your lender requires their first payment. We have just remortgaged to a new lender and received notification three days after completion. Our new lenders required payment date is 16th of every month, whereas our old lenders was the 1st of every month.

Yorkie1

You agree with the lender which day of the month they will take the payment from your account. So although the payment falls due on, probably, the first of the month, you may agree that it is taken out on, say the 5th.

After completion and before the first payment date the lender will write to you and tell you how much the first payment will be.

So, if you complete today (15th), and your payment is due on 5th of next month, on the 5th you will pay your regular monthly payment (i.e. for November) plus the pro-rata amount for the days in October after completion.

Hope that makes some sense.

Made_Without

@Yorkie1

Thanks! Makes sense - am just having panic attacks that I will have a shorfall if they ask for it immediately.
Mind you, havent exchanged yet - so this could all still be theoretical!

C*F

Littlebutterfly_2

HelenDaveKids wrote: »

We complete on Friday. I understand our first payment is the date we asked for, which is begining of month (1st), however you have to pay an additional payment with the first one, which at best guess i would say is about 2 3rds of monthly payment. No idea why but was expecting it as I knew thats what they did. Makes that first month VERY expensive.

we've already had our bank notification telling us about this.

Hmmm...not heard about this extra amount being payable - do you perhaps mean your product fee?

Lb

Cissi

Littlebutterfly wrote: »

Hmmm...not heard about this extra amount being payable - do you perhaps mean your product fee?

Lb

Umm, it's not an "extra" amount - if you complete on the 15th of the month and your mortgage isn't collected until the 5th of the next month, did you think you'd be living for free in those first 3 weeks?

colli

we completed on the 23rd Aug, first mortgage payment was 1st Oct. It was payment for Sep plus interest for 23 Aug-1st Sep. We were notified of the amount a week or so after completion but I guess it depends on your mortgage co (HSBC for us). worked out well as coming from rented no mortgage or rent to pay for Sep, can't see having a month like that for a long time!

TrickyDicky101

Mortgages traditionally quote and charge interest on the basis of repayments in advance which means if you take out your mortgage on day 1 then the first repayment is also due on day 1 (the alternative would be repayments in arrears whereby the first repayment would be due after 1 month). Doing this serves to reduce the headline mortgage rate charged marginally and thus reduce the size of the monthly repayments slightly which may explain why banks quote on this basis (as if taken out on a repayment date, the amount borrowed is effectively Mortgage Amount less First Repayment Amount).

If you take out the mortgage on a non-repayment date, then on your first repayment date you will thus have to pay the first full repayment amount plus any accrued interest from the date the mortgage was advanced to the first repayment date. This can be quite a shock if you set repayments for eg the 1st of the month, but take the mortgage on the 2nd, as you will pay almost double your normal monthly repayment on the first repayment date.

Made_Without

TrickyDicky101 wrote: »

Mortgages traditionally quote and charge interest on the basis of repayments in advance which means if you take out your mortgage on day 1 then the first repayment is also due on day 1 (the alternative would be repayments in arrears whereby the first repayment would be due after 1 month). Doing this serves to reduce the headline mortgage rate charged marginally and thus reduce the size of the monthly repayments slightly which may explain why banks quote on this basis (as if taken out on a repayment date, the amount borrowed is effectively Mortgage Amount less First Repayment Amount).

If you take out the mortgage on a non-repayment date, then on your first repayment date you will thus have to pay the first full repayment amount plus any accrued interest from the date the mortgage was advanced to the first repayment date. This can be quite a shock if you set repayments for eg the 1st of the month, but take the mortgage on the 2nd, as you will pay almost double your normal monthly repayment on the first repayment date.

I *think* I follow and understand - thanks!s