Interest due between completion and first payment

Arthien

FTB here hoping someone can advise! My OH and I are heading towards exchange of contracts and want to make sure we know exactly what amount of money will be due and when.

The mortgage advisor at Nationwide mentioned that we would be due to pay interest from the date of completion, up until the date of the first mortgage payment. I assumed that this would mean that we could (hypothetically) complete on November 4th and pay only a few days' worth of interest on top of our first payment on November 8th. However, I've since queried it and been told that the first payment is due the following calendar month, so if we completed on November 4th, we'd have a month's worth of interest due on top of the monthly payment on December 8th.

Does this sound right? If so, could we reduce the interest due by moving on the last day of October, and then pay only a small amount of interest and our first payment on November 8th?

I know buying a house is expensive, but they want nearly double our mortgage payment in one go if we stick to the original dates, just before Christmas! :eek:

kingstreet

The completion date determines the accrued interest.

If you complete on last day of month, first payment will be a normal one month's payment and will be debited around 14 days after completion.

If you complete in the middle of the month, there will be accrued interest from completion to the month-end, plus a full month's payment.

Either way, the lender will write to you just after completion to confirm what will be payable and when.

cath708

I am in the same position and am waiting on nationwide getting back to me, I've been told that the first payment may be up to £1400 due to interest. I've arranged for my mortgage payments to be taken out on the 21st of each month but we are hoping to complete on 20th November. Would my first payment be double in December?

kingstreet

The first payment and your regular payments are not related.

The first payment is made up of interest from completion date to the end of the month and a full months payment and is debited around fourteen days after completion.

Your first regular payment will then fall on the day you have requested.

Remember, building societies and former building societies collect in advance, not in arrears.

Arthien

Thanks Kingstreet, that's what I thought! So our best bet seems like 31st October then.

I've just had a call from the solicitor asking us to come in and sign when we're ready, but we're getting married next week so they're going to draw up the contracts in my new name, and then we'll sign.

However, if we want to move at the end of October, we need to give a month's notice on our rental place by October 8th, but we don't get back from honeymoon until September 27th. The solicitor said we could go in and sign on 28th, but would that give us enough time to exchange before the 8th? I asked how long between signing and exchange, as we've got no chain, but the answer was pretty vague...

kingstreet

There is no set date to exchange contracts.

It's the point where all the paperwork is done and everyone in the chain has agreed on the completion date.

It's just a phone call between solicitors on the day, with the paperwork following up afterwards.

Arthien

Ok, so if we've agreed a date with the vendors (it's a probate property) and the solictor is happy with everything when we sign, there's no reason why we can't exchange before October 8th then? That's great news!

Thanks for your help! That's reassured me, we may be in and settled in time for Christmas after all

Dan-Dan

Seems a good place to ask , we are supposed to be exchanging (today apparently) , mortgage is with Halifax , and aimed completion date is the 1st October

What can i expect based on this , looks like a months mortgage + interest for a month within 14 days of that date plus another months payment on November 1st?

kingstreet

Halifax has a guide which set this out, depending on when in the month you complete;-

C. First and subsequent payment collection dates

Depending on when in the month you take out your mortgage, we will collect your initial interest, together with your first and subsequent payments as follows:

• Mortgage taken out on 1st-9th – we will collect initial interest 14 days after the date of your mortgage.

We will then collect your first monthly payment on your preferred payment date in the month following the month during which you took out your mortgage. We will collect subsequent monthly payments on your preferred payment date each month after that.

• Mortgage taken out on 10th-17th – we will collect initial interest and the first monthly payment on your preferred payment date in the month following the month during which you took out your mortgage.

We will collect subsequent monthly payments on your preferred payment date each month after that.

• Mortgage taken out on 18th-31st – we will collect initial interest and the first monthly payment 14 days after the date of your mortgage.

We will collect the second monthly payment on your preferred payment date in the 2nd month following the month during which you took out your mortgage. We will collect subsequent monthly payments on your preferred payment date each month after that.

Note - this is an old guide and the new one for the 10/ numbers is more vague.

In doubt, ask the lender directly.

xyz123

just a minor point taht completion date doesnt automatically determine the start of interest. Typically solicitors request funds from your bank on the last working day before completion day. So if completion is on Monday, they will request money on friday or saturday. You will start paying interest from friday or saturday.