First mortgage payment querying

rdchick

Hi guys

Just looking through our paperwork from Halifax. It states that our first payment will be £1597.24 and then £964.18 a month there after. 

I get that interest is added on between the completion date and the first payment but is it really gonna be £600 more?! (I mean it's not the end of the world but just wondered if it was right) 

Thanks guys!

rdchick

Should also say that this is in the offer letter not completion or anything so the offer is valid from June to December 

MovingForwards

The interest is calculated from drawdown and your first payment may not be set up in time to be whatever date you picked for the following month, therefore it will be the month after that.

Eg drawdown is on the 25th, ready to complete on the 26th August, you've set the DD for the 1st, but that's not enough time for the bank to set it up and give you the required notice, so the extra interest is latter part of August and all of September, taken with your first payment 1 October.

rdchick

Gotcha ok, so we just kinda have to wait and see where completion lands as to when and what it will be we have to pay, thank you! 

TrickyDicky101

How much are you borrowing and at what rate?  With that you can estimate the likely amount you will need to cover for first payment (depending on when you complete).

kingstreet

The illustration assumes completion on 1st making the accrued interest as high as it could be. The closer to the month-end you complete, the lower the accrued interest.

kingstreet

MovingForwards said:

The interest is calculated from drawdown and your first payment may not be set up in time to be whatever date you picked for the following month, therefore it will be the month after that.

Eg drawdown is on the 25th, ready to complete on the 26th August, you've set the DD for the 1st, but that's not enough time for the bank to set it up and give you the required notice, so the extra interest is latter part of August and all of September, taken with your first payment 1 October.

If the lender collects in advance, as many building societies and former building societies do; in your example, first payment would be in mid-September (for September plus accrued interest for August) and the first regular payment will be due in October.

See Halifax as an example - page 8 & 9 here;-

https://www.halifax-intermediaries.co.uk/pdf/info-about-your-mortgage.pdf

Clearing banks collect in arrears.

rdchick

Thanks everyone, only just seen the replies

So our mortgage is with Halifax, we are looking to complete around the 19th of August. 

We are borrowing £245,999 on the rate of 3.03%

Thanks guys!

kingstreet

rdchick said:

Thanks everyone, only just seen the replies

So our mortgage is with Halifax, we are looking to complete around the 19th of August. 

We are borrowing £245,999 on the rate of 3.03%

Thanks guys!

Accrued interest of £245.05 if funds drawndown on completion day.

rdchick

Thanks @kingstreet!