First Mortgage Payment

caz72me

I am totally confused as to our first mortgage payment and how much will be due, there is so much conflicting advice online. Our mortgage advisor told us its best to complete at end of the month or we could have a massive first payment, our solicitor is arguing with us that it doesn't make any difference - basically if we get paid our wages on the last day of each month and I put £800 away for our mortgage from our next (30/9) and subsequent paydays for the mortgage until the first payment becomes payable (our monthly repayment mortgage payment will be £798) will I get stung with a bill that we won't have the money put aside for which we wouldn't get if we complete at the end of a month.


So for instance if we completed on the 15th October surely the payment due on the 1st November would be 16 days mortgage + our normal £796 mortgage payment, and it would mean I'd have already put aside £800 from our wages on the 30th Sept and then another £800 from our wages 31st Oct so more than covering it with £1600 put aside for it? or am I totally misunderstanding everything?


I'm confused

davidmcn

I think most lenders skip the first normal payment date so you would have a payment on 1 December equivalent to 1.5x your usual amount. But it should be explained in your mortgage offer (if you have that)?

HGW2012

Who is your mortgage with?

Mine is Halifax and in our offer it outline what we would pay when.

Basically I think our first payment is slightly more one calendar month after we complete and then a month later normal payments start.

I think there is a cut off date for completion and when the first payment date is. And as long as they had 14 days notice we could change the payment date to the 1st on the month (As that would be more convenient for us)

caz72me

Our mortgage offer is from Natwest, I searched through the paperwork and it wasn't clear - it just says we will receive a letter from them after completion about our first payment - not really helpful when trying to budget and time a completion date to spend the least possible (we need as much spare cash as possible to replace the kitchen on a very tight budget)

[Deleted User]

Our normal payment is £700 per month and our first mortgage payment is £1200. We don't know when this will be taken either as not at completion stage yet, hence wishing our purchase would hurry up so we have to stop living super frugally!

saajan_12

caz72me wrote: »

So for instance if we completed on the 15th October surely the payment due on the 1st November would be 16 days mortgage + our normal £796 mortgage payment, and it would mean I'd have already put aside £800 from our wages on the 30th Sept and then another £800 from our wages 31st Oct so more than covering it with £1600 put aside for it? or am I totally misunderstanding everything?

This is how it worked for us. The mortgage adviser is probably assuming people only budget 1 month’s wages for the first mortgage payment. However if you budget the part month for the month you actually complete in (oct in your example) you should be fine.

[Deleted User]

HI, I have recently completed with Natwest (July 17th) and we then received a letter a couple of weeks later t that our first payment would be 26th August and it was for the normal amount we expected...I too was expecting an increased payment but nope...:) We did budget for 1.5 of the mortgage payment just incase but wasn't needed

kingstreet

How lenders charge is important.

Building societies and former building societies charge in advance. This means your first month's payment is due immediately.

Clearing banks, such as HSBC, Barclays etc charge in arrears so you pay a month after the mortgage starts.

Accrued interest is the money needed to cover the period from when the funds are drawn-down to the end of that month and are added to the first month's payment.

If the funds are drawn-down at the beginning of the month, accrued interest will be more than when funds are drawn-down at the month-end.

As to the actual payment dates, these will vary from lender to lender but a lender which charges in advance is usually going to take the first payment a couple of weeks after completion and once which charges in arrears is going to be a month to six weeks after.

Lenders write to borrowers after completion to confirm what the first and subsequent payments and dates will be.

armchaireconomist

I completed on the 28th April, my first mortgage payment was due on the 1st May (which covered the month of May only).


My total first payment was the stated monthly mortgage payment + interest only for the 3 days between completion and first payment.

wantonnoodle

kingstreet wrote: »

How lenders charge is important.

Building societies and former building societies charge in advance. This means your first month's payment is due immediately.

I don't believe that is strictly true. We have a mortgage with the West Brom which is still a building society. Our first mortgage payment had to be exactly 1 calendar month after completion (so as we completed on the 24th Feb, our first payment was the 24th March). After the first month's payment cleared, we were then able to change the payment date to any day we wanted as long as there was at least one payment in every calendar month (so we couldn't ask for the next payment to be the 1st May for example, if we'd wanted the 1st, we would have had to make a payment the 1st April). As we wanted to change it to the 28th, this was no problem for us.


So I don't think there are any hard and fast rules about building societies vs banks, I think its much more granular than that, and every lender may be different.

Time2go

Thanks tonthis forum I checked this with mortgage company I'm going with (precise) and if you complete within 12 days of end of month 1sr payment is due 14days later and then on 1 month (so 31 Oct completion first payment due 14 Nov and next 1 dec).

Therefore we are putting off completion to 2 November and first mortgage payment will end up being 1 Dec.