1st mortgage payment after completion

muhandis

Hi,

I'm an FTB completing on a house purchase on the 21st of December.

In Nationwide's mortgage offer letter they say that the first payment will be due on the 1st of the month following completion, which I would take to mean as the 1st of January.

However, my broker assures me that the process will take at least 2-3 weeks after completion and that the first payment will be due only on the 1st of Feb and this will be communicated in a letter from NW in about 2-3 weeks after completion. He warned me that it would be prudent to assume that it would be about twice the regular monthly payment in size.

The reason I'm asking is that my cash flow situation is quite tight if the payment is due on the 1st of January (I will have the funds to pay it, just that I will not be able to spend on anything much else until my January salary comes in on the 25th of January).

If it will only be due on the 1st of February, it's all fine as my January salary will be in by then.

Any opinions on what my broker said? Does what he said seem plausible?

Many thanks.

bearcat16

Personally I would plan with a view to it being due on the earlier date, as inconvenient as that may be.

When I started my mortgage (Halifax), the 1st payment was taken on the agreed day (28th) immediately after the funds had transferred, even though that meant a short month. It did not take a few weeks to arrange.

I suppose each bank is slightly different, but my advice would be to err on the side of caution.

user1168934

My experience seem to concide with what your broker has said but it could be because I completed on 26th and chose 1st as the direct debit date and there was not enough time for the lender to setup everything and issue direct debit instruction.
Normally the banks are required to send a direct debit instruction at least 3 working days before the intended date. For the first direct debit this duration is normally 10 working days.
I think your first payment will be 1st of Feb but the only way to be sure is to call the bank and ask them. Also the banks normally send you a letter after completion which says the exact date they will collect the first payment on. They are not too much concerned about collecting the first payment 1 month late because it is a long term business model. Don't worry too much but definitely give them a call.

kingstreet

Being a building society, Nationwide collects in advance.

At completion, a letter goes out within ten days explaining the first and subsequent payments.

I expect your first payment which will be a full month, plus interest from 21/12 to 31/12 to be debited around the second week in January, with your first regular payment being on the selected date of the month in February.

Clearing banks collect in arrears, so an HSBC or NatWest mortgage would see payments start in Feb on a December completion.

muhandis

Many thanks all.


To be on the safe side, looks like it would be best if I planned for a January payment which unfortunately means a :money:recommended 'lean' Christmas