Mortgage first payment query

manamanah88

Hello,

I have just spoken with the bank as our completion date has been pushed forward to Jan 10th 2014.
They told me that this would mean we pay the first mortgage payment on March 1st, plus accrued interest from Jan 10th.
I understand this okay, but wonder is there any benefit in completing later in the month? i.e. fewer days accrued interest added to the first payment?

Would completing early in the month effectively mean we end up paying more interest and less capital overall, or does it balance out in the end?

Obviously it all depends on what suits the other parties involved so we'd have to accommodate their wishes, I just wanted to be sure I understood everything fully.

Any clarification/advice would be great, thank you!
:huh:

brettcta

that's gonna be one helluva first payment

kingstreet

Even with a clearing bank's collection in arrears, this should be the beginning of March at the latest.

It would be accrued interest from 10 Jan to 31 Jan, plus a full month's payment for February and debited on 1 March.

If you are paying accrued interest, you have the benefit of owning your home quicker, so you are not losing out in any way. If you still want to avoid it, complete closer to the end of the month.

The month in which completion takes place has no impact on capital, as the mortgage term doesn't really start until the 1st of the following month.

manamanah88

brettcta wrote: »

that's gonna be one helluva first payment

Oops I meant first payment in March!

manamanah88

Thanks kingstreet,

Yes I meant March, sorry. My mistake. I've edited the post so it is correct.
So if I understand correctly, if the term begins Feb 1st, then we will have paid 3 weeks of interest more than if we were to complete late Jan, so overall more interest paid (same amount of capital either way)?

We're in no hurry to move in so may ask if a slightly later date works for the other parties. Has anyone got any reasons from experience not to do this?

Thank you for your replies!