mortgage payments

andys15

Hi.
I am a FTB and due to complete on the 20th June. I am trying now to budget my money and a little unsure how the process is going to work.
Ok my rate is 5.34% and the mortgage is for 227571 (after deposit, fees etc).
Now I believe my mortgage is calculated yearly.
Ok my first payment will be on the 20th July and I understand it to be 1 month and 1/3 payment (something I dont understand why).
Now on the 20th July I can call the lenders and specify a date I would like the direct debit to come out. I wondered what would be best in the short term, of having my second payment on the 1 st August or on the 30th August. Obviously if i chose the 30th August I would have pay that mortgage with Septembers pay,but would it mean another overpayment. If I pay on the 1st then they will always owe me money, but I wouldn;t see that until my mortgage is paid, and I would prefer the money now..

ps no replys of how silly I am being buying a house, save that for the relevant forums.

andys15

anyone have any ideas?????????

CLAPTON

are you paying by DD or standing order or how?

when do you get paid.

what happens in February

andys15

Febuary will just be taken at the end of the month.
I get paid 3 rd last day of the month. I will be paying by direct debit.

It does actually make a massive difference in your 2nd payment wether you pay on the 1st day of a month or the last day, but I dont know how.

Tiddler_2

Hi,

Most lenders charge you on a calender monthly basis, so you pay the money in the month it is due. i.e June's payment is paid between the 1st and 30th of June.

Therefore if you are completing on the 20th July, you are charged interest from the 20th - 31st July (this is often referred to as "Initial Interest"). You are also then paying August's payment aswell, as with most companies this becomes due on the 1st of August.

Your second payment is due on 1st September.

Now most companies, again, will allow you to pay on any day between the 1st and 28th of the month. The choice of payment date is up to you, but which is the most beneficial really depends on how interest is charged.

If you are charged Daily Interest then the best date to pay is the 1st of the month, as your interest charge is based on your balance at the end of every day

If it is Annual Interest, then it doesn't matter which day you pay, as your interest is charged on your initial balance (or balance on the lender's year end or review date - e.g Halifax used to use balance at 1st Feb, before they adopted daily interest)

Which mortgage company is your mortgage through?

andys15

Tiddler wrote: »

Hi,

Most lenders charge you on a calender monthly basis, so you pay the money in the month it is due. i.e June's payment is paid between the 1st and 30th of June.

Therefore if you are completing on the 20th July, you are charged interest from the 20th - 31st July (this is often referred to as "Initial Interest"). You are also then paying August's payment aswell, as with most companies this becomes due on the 1st of August.

Your second payment is due on 1st September.

Now most companies, again, will allow you to pay on any day between the 1st and 28th of the month. The choice of payment date is up to you, but which is the most beneficial really depends on how interest is charged.

If you are charged Daily Interest then the best date to pay is the 1st of the month, as your interest charge is based on your balance at the end of every day

If it is Annual Interest, then it doesn't matter which day you pay, as your interest is charged on your initial balance (or balance on the lender's year end or review date - e.g Halifax used to use balance at 1st Feb, before they adopted daily interest)

Which mortgage company is your mortgage through?

Hi

My mortgage is with the post office (bristol and west).
I am completing on the 20th June, and they have said my first payment will be on the 20th July. I will pay all of Julys mortgage on the 20th july, plus 20th jun-30jun.
If I then make my next paymnet on the 30th aug, that I assume pays the whole of aug, but the actually payment will come out of my pay in september, which I assume means that my august pay will effectively make me mortgage free for a month.

Kez100

I can't remember our exact dates but when we have moved in we have always paid what seems more not less so I think it very unlikely you will get what seems like a free month.

Treadmill

You cant normally get a DD with a date later than the 28th of the month.

MarkyMarkD

My mortgage is with A&L and the DD is set up to be the last day in each month. Even better than that, it means that if last day is a Saturday, you don't pay until the following Monday but your mortgage account is credited on the Saturday.

andys15

I dont mean a free month from not paying my mortgage. But if I pay my 2nd mortage payment at the end of august rather than the beginning of august, then my September wage will already be in the bank, which means that after paying my 1st mortgage payment on the 21 july(julys pay), exactly 1 month from when I own the house, and make the next payment the end of august(septembers pay) then my august pay will be not used to pay a payment. Am I right in assuming this?????

mitchaa

The July 20th payment will be for 20th June - 31st July surely? (1 and 1/3 like you said, the 1 being the whole of July, the 1/3 being the 20th-30th June)

Then you will be expected to pay another payment on 1st August to cover the period of 1st-31st Aug?

if you leave it to the 31st Aug before payment wont you then have 2 months worth? 01-31st Aug and 01-30sept? (Either that or you've unnecessarily added 1 months worth of interest onto your mortgage by delaying payment for 31 days?)

I would have thought anyway?