Mortgage first payment

kingstreet

The earlier in the month you complete, the more accrued interest you pay, as this is interest from the date the money is drawndown by the solicitor, to the month end.

Ergo, a completion date of 1st will have higher accrued interest than a completion date of 15th and a completion date of 30th may have none, or just a day.

Solicitors routinely tell people to complete at the end of the month to avoid accrued interest and so do decent brokers.

StuC75

Correct - interest accrues from the date that they forward funds.

That 'broken' month of interest only is always added to the first instalment to make a higher possible payment.

That's why people 'tend' to complete in the last couple of days so it gives the illusion of being less.

Its just unfortunate that as you chose the 1st day of the month that they were able to set it up and claim payment so quickly.. you could question the length of notice given.. but the payment would still be due.. Its just one of those 'hidden costs' of buying..

mr_cool wrote: »

Thats correct it showed a example amount, just not the date it came out.

So if I waited till 1st are you saying the Dec 1st payment wouldn't just be a standard monthly payment would be larger?

mr_cool

They also said I can change payment date to anything I want (ie. end of month instead of 1st) but it would slightly increase my payment due to how interest is calculated. How is this?

StuC75

Have they said by how much - was that to every months payment?, there can be subtle differences between banks & building societies in how they calculate and charge the interest to the account.

I'm with Britannia and know it makes no difference to the amount to pay.

What you do have to watch is that if you change from say the 28th to the 1st of the month then you are likely to have a double payment go out within a couple of days - eg. 28 Nov for November payment, then 1st December for December; you wouldn't get a months grace and go 28 Nov, 1st January. Extra interest might be charged to one months payment if you changed from the 1st to 28, since there is effectively more days that the extra interest is on the account..

mr_cool wrote: »

They also said I can change payment date to anything I want (ie. end of month instead of 1st) but it would slightly increase my payment due to how interest is calculated. How is this?