First mortgage payment

steveandel

We are completing on our purchase very soon (hopefully!) and I just wanted to check aboutthe first mortgage payment. I seem to remember that the first payment is likely to be higher to cover the interest accrued before completion? I can't remember what this interest is due to! Is it interest accrued from completion date to the first day of the month after that (mortgage payments will be on the 1st of the month), or is it interest accrued between exchange and then? The extra amount can't be more than an additional months worth of interest can it?

Sorry, i'm confused!:o

BeerBelly

If you complete at the end of the month - say 30th of this month - your first payment will be the quoted month installment + 2 days in this case.

Its also worth noting the 1st payment gets taken as an advance i.e. you've just moved in but have to pay a mortgage payment (first one can take up to 2 weeks to be processed/taken out) straight away.

If you completed on 3rd and payment comes out 1st of the following month you would get a near double whack I would imagine.

Guess this is why Mortgage Advisor tell you complete near end of month.

Dani85

Hmm this has confused me We moved in on the 9th March, but I got a letter from my mortgage people saying that on 1st April (the 1st being my instructed date) my payment will come out and it is the normal monthly payment!

BeerBelly

Thats blown my theory out of the water!!

Spoke to lender (Nationwide) yesterday and they said this.

Thought I had it sussed! hmmm, will give them a tinkle again.

MarkyMarkD

It can depend on the lender. Most lenders do it the way described by BeerBelly, and the first payment is more than a standard month's (because it covers a period of more than a month).

If they do it the way it sounds like Nationwide do, you are effectively deferring paying that part month's interest until the end of the year at which point it will be capitalised and you'll pay it off over the remaining term.

Dani85

Ahh right mine is with RBS

sarah_elton

Phone your lender (I did a few weeks before completion) and ask when your first payment will be, and how much. They can tell you the exact amount. Best to do this as it does vary by lender.