1st payment on mortgage

gimgems

Hi all, just a quick question.

When is the 1st mortgage payment taken?

EG.
If we were to complete 27th June and have requested that a the mortgage be taken out of account on the 5th of each month, would we make a payment on the 5th July or 5th August? If the latter would it be a higher than normal amount because of interest??

Thank in advance

Wozza85

I asked my bank the same question recently, They may not take anything out on the 5th of July but then the payment may be larger for 5th of August. You may have to ask them as it could be a case of them taking the small amount on the 5th July and then regular payments from August. call and ask I'd say, all lenders probably treat this differently.

kingstreet

Depends on lender.

Clearing banks collect in arrears, building societies and former building societies collect in advance.

Your first payment will be a full month's payment, plus accrued interest from the date the funds were drawn down until the month end.

When that is collected will depend on your chosen lender.

gimgems

Thank you for your replies. I'm just trying to budget so basically if I leave what I would have paid in mortgage on 5th July in my account then the large 1st payment they take in August would/should be more than covered am I right?

kingstreet

If you're saying you'll have two months' full mortgage payments in your account, yes, you should have enough.

In the worst case scenario, where payments are made in advance, your first payment will go out around two weeks after completion and will be made up of a full month's payment, plus interest from drawdown date to that month end, with your first regular payment going out on the next 5th of the month thereafter.

So, you could pay just over two months' payments, around three weeks apart.

Using your example of 27 June, if the money is drawndown on 26th June.

First payment, full month plus four days interest, debited on or around 12th July with first regular payment of a normal month's payment on 5th August.

You need to ask your lender how it collects to have any degree of accuracy.

gimgems

Great example. Thanks very much.

amnblog

You should have 3 months mortgage payments in hand anyway.

Less than that and you have not back up for later problems.