First payment after re-mortgage - why higher?

ackoman

Hi,

I am in the process of moving my mortgage from Santander to Lloyds, and have been told by Lloyds that my first payment is likely to be higher than all subsequent payments and that this is as a result of interest being charged from the day that they release the funds. I am a bit confused by this, since it seems as though I am at the mercy of when in the month this takes place - in the worst case, it could be as much as £700

Will there be a corresponding refund from my current lender, since they will be getting their debt paid off and my last payment to them will be higher than it needed to be for that month?

Any clarification would be much appreciated!

Thanks,

jra505

amnblog

The two lenders by definition will not be charging you interest for the same days as one is replacing the other.

You current lender will provide a settlement figure based on the day the change is due to happen, this factors in the interest to that date and no further.

kingstreet

You can avoid accrued interest by completing the remortgage at the end of the month if you are that bothered. As AMN says, you don't lose out because you aren't paying two lenders at the same time, although if the rate is lower on the old mortgage it makes sense to stay on it as long as you can.

ackoman

That is what I was hoping you'd say - thanks both