First monthly payment on mortgage

Tumtitums

Hello i have opted for a fixed rate mortgage and on looking at the offer again i have noticed that the very first payment is much more than the other monthly payments to be paid over the mortgage period. Can you explain in plain english why this is . Is this normal ? its about £300 more than my other monthly payments during the fixed term. The purchase has already cost a lot and im annoyed at this extra cost

Tumtitums

are they penalising me because im a first tome buyer

GwylimT

It isn't an extra cost, you make your mortgage payments in advance, so you are paying for the time you have had your mortgage and for the next month.

ethank

This is called initial interest and is a payment that covers the period between date where you solicitor received funds from the lender (sometimes the day before or the completion date) and the normal date when the mortgage is due.

kingstreet

The closer to the end of the month you complete, the lower the accrued interest.

Building societies and former building societies collect in advance, clearing banks, in arrears.

These things influence the amount and timing of your first payment.

goodmorningsunshine

The first payment is nearly always more than the normal monthly payment and this should have been explained to you.

You take the date they transfered the monies and calculate to the date you agreed. eg Money transfered 14th of the month - agreed to pay on 28th of the month. = 2 weeks

They don't charge you for the two weeks only but add it on to the following months payment = 6 weeks to pay.

The following month it should be as you agreed.

Hope this sheds some light on it.

kingstreet

goodmorningsunshine wrote: »

You take the date they transfered the monies and calculate to the date you agreed

It is not calculated to the preferred payment date, it's calculated to the month end.

With most lenders, the preferred payment date only becomes "live" for the regular monthly payment, not the first payment.

goodmorningsunshine

kingstreet wrote: »

It is not calculated to the preferred payment date, it's calculated to the month end.

With most lenders, the preferred payment date only becomes "live" for the regular monthly payment, not the first payment.

Oooops !!!!! taking it for granted - its the end of the month.
Late night !!!

Tumtitums

Thanks, i am a first time buyer and this hasnt been explained to me before . Its now occured to me that its very good that i am aiming to complete at the end of the month so hopefully this extra amount will be very low . Its a bit annoying that my solicitor hadnt mentioned this to me as i'm pretty sure that she is aware of this

kingstreet

It's even more annoying that whoever sold you a mortgage didn't explain the simple concept of accrued interest, before you signed up with them!

Tumtitums

kingstreet wrote: »

It's even more annoying that whoever sold you a mortgage didn't explain the simple concept of accrued interest, before you signed up with them!

well i was getting a bit suspicious as my mortgage payment plan didnt state what the first payment would be , thats what got me looking into this issue