First Mortgage Repayment Question!

[Plumpkinbump]

Hi there!

We have just bought our first house and completed on the 20th October. We have received a letter from the lender saying our first month will be £190 more on top of our usual monthly amount. I have read up and understand that you pay interest only from 20th October until the end of the month plus the normal monthly amount. This is fine and is expected.

What I am confused about is this:

"Your first monthly repayment will be £XXX and thereafter £XXX monthly until the next review and collected by Direct Debit on or immediately after 1st December 2006".

Do mortgage repayments come out at the start of the month, for the month before? Having rented before, we pay on the 1st of the month, for that month. Will we pay on the first of December for November's mortgage (plus this extra bit for the end of October) and then the first of January for December's mortgage etc?

I really want to understand this, as it could mean that the money we expected to pay out on the 1st November, could go into our savings/IKEA budget (!) and by going from a month in advance to a month in arrears has essentially saved us a months worth of money!

Hope you understand what I am asking!!! Any advice welcome!

Yes. You pay in arrears. Of course you haven't actually saved any money because you'll have more to pay at teh end, but you will have improved your cash flow situation. have fun in IKEA

so do you mean it says your first payment will be on 1st december and that payment will be £190 more than your normal payment. then your normal payments will go 1st jan, 1st feb, 1st march...? if it says it starts in december then it starts in december, you won't have a payment in november.

that seems to be what its saying - normal payment plus 190 for the extra bit for end of oct, then normal thereafter -

I will be delighted if this is the case as we'll be better off financially when we come to move again or indeed pay off our mortgage.

Prufrock - are mortgages always paid in arrears then?

It depends on the lender some are in advance and some are in arrears. If your 1st payment is around the beginning of Nov you will be in advance but if it is in Dec you will be paying in arrears. It seems like you'll have a little extra cash in Nov- that'll be handy for Christmas!

Well not always. But It's not realy like rent, it's a loan. And you wouldn't expect to pay off a loan before you have it IYSWIM.