First Mortgage Payments

Matt-J_2

Before anyone says 'best talk to you mortgage lender', this is more just to get it off my mind and some excellent MSE advice

Let me put it into bullet point,

Monthly mortgage payment: £700
Next Mortgage Payment Date: 7th April

We are looking to exchange contract on the 27th March but...how much will our mortgage lender want for the time between the exchange and first payment and how will they calculate it?

Of course we do not want excitement to get the best of us (our first house) and launch into the exchange and then have a hefty first bill.

If i understand correctly a mortgage is paid a month in arrears so my guess would be, we would pay from 27th to 7th at maybe a 'calculated daily rate'. Then the 7th May would be our first 1 month payment?

Thanks everyone!!! :D

nala1157

When we bought our first house last year we exchanged on 23rd march but the first mortgage payment didn't come out until start of may. Was a bit higher than the normal monthly payments to account for the longer period of interest being accumulated. So guessing that you may be similar and first payment mightn't be until may. Was nice having a "month off" mortgage/rent with all the expense of moving house!!

kingstreet

Exchange has no relevance to mortgage payments.

Your first payment will depend, in most case, on when completion takes place.

Normally, your first payment will be the accrued interest from completion, to the end of the month of completion and it could be accompanied by your first full mortgage payment.

Therefore, if completing on 27 March, you would pay four days interest until the month end, perhaps with a full month's payment on top, on 1 May.

If using a clearing bank, which does collect in arrears, you may not pay accrued interest and your first payment may not be until 1 June.

You really need to establish what your lender's practice is and what your completion date will be.

dotdash79

In your final mortgage offer it should state what happens at the start of the morgtage about fees.

I had to make a payment from the completion date to the end of the month for the intrest and then make the mortgage payment on the 1st.

kingstreet

dotdash79 wrote: »

In your final mortgage offer it should state what happens at the start of the morgtage about fees

The mortgage offer will show an assumed completion date, which generates an approximate first payment.

If you take Nationwide as an example, it always estimates the completion date as 1st of the month and this ensures the first payment is the maximum amount possible - a full month's accrued interest plus a full month's mortgage payment.

At completion, the lender issues a letter explaining the actual first payment amount and date and this confirms the individual borrower's situation.