PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

When/how does mortgage payment start?

Options
wessexw
wessexw Posts: 224 Forumite
in House buying, renting & selling
My solicitor is starting the process today to draw the funds from my mortgage lender, but thats made me realise that I have no idea about how I'm going to physically start on my monthly mortgage payments as nothing has been mentioned about direct debits etc. Will money start magically disappearing from my account on a monthly basis? The lender do have my account details as they took the valuation money from there but nothing has been discussed about when/how I will pay. Should I be worried that this hasn't been sorted bfore now or will it come later once I receive the actual funds?

Comments

  • loubel
    loubel Posts: 824 Forumite
    Name Dropper First Anniversary First Post
    Options
    Ask your broker or call the lender directly and they should be able to tell you when the payments will be taken.
  • wessexw
    wessexw Posts: 224 Forumite
    Options
    Brokers phone is on the blink today! Can't get through :S
  • TrickyDicky101
    TrickyDicky101 Posts: 3,514 Forumite
    First Anniversary First Post
    Options
    You will want to check when the first repayment date is and whether your mortgage charges interest on the basis of repayments in advance rather than repayments in arrears. This can cause a headache to unwary borrowers as if interest is on an advance basis then the first repayment is actually due on the day you take the loan out (counter-intuitive, I realise) and if your first repayment date is nearly a month after you take the mortgage out (eg repayments agreed as being 1st of month, you take out mortgage on 2nd of month) you will end up paying almost twice your normal monthly payment on the first repayment date which will fall 29/30 days after your completion date.
  • sonastin
    sonastin Posts: 3,210 Forumite
    Options
    I think my mortgage offer had an assumed start date and then a "first payment amount" and then subsequent payment amounts, with the first payment including the interest accrued between the assumed start date and the first payment date. I had to select a preferred payment day on my application though. So for me, payments are taken on 1st of the month, based on assumption that the mortgage would start on the 4th the first payment would be normal payment amount + interest from the 4th up until payment was taken on 1st of next month - nearly twice as much as the usual repayments!

    I think that is what TrickyDicky101 is getting at as well...
  • kkgree1
    kkgree1 Posts: 328 Forumite
    First Post First Anniversary Combo Breaker
    Options
    We completed on our house on 10th November. Our mortgage was drawndown on the 9th so our first mortgage payment is exactly a month later on the 9th December. This is a full month's mortgage (just over £600 in our case) + additional interest to cover from 9th November (about £200). Obviously this depends on how big your mortgage is.

    From January our direct debit reverts to the 1st of the month and the normal amount.

    Hope this helps.
    Mortgage free wannabe
    Mortgage (November 2010) £135,850
    Mortgage (November 2020) £4,784
  • TrickyDicky101
    TrickyDicky101 Posts: 3,514 Forumite
    First Anniversary First Post
    Options
    sonastin wrote: »
    I think my mortgage offer had an assumed start date and then a "first payment amount" and then subsequent payment amounts, with the first payment including the interest accrued between the assumed start date and the first payment date. I had to select a preferred payment day on my application though. So for me, payments are taken on 1st of the month, based on assumption that the mortgage would start on the 4th the first payment would be normal payment amount + interest from the 4th up until payment was taken on 1st of next month - nearly twice as much as the usual repayments!

    I think that is what TrickyDicky101 is getting at as well...

    Wasn't that exactly what I said? :rotfl:

    It does depend on what basis the interest is calculated though (most mortgages are repayments in advance AFAIK but not all - unsecured loans are usually payments in arrears).
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.3K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 248K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards