First mortgage payment question.
Discussion
Hiya,
I can't really get my head around this, so could anyone offer some advice?
I currently have a mortgage, but I'm re-mortgaging, with the same lender, on the same deal, just making a big overpayment so the new mortgage will be for a smaller amount. Effectively this means that the old mortgage is redeemed by the new mortgage + capital. My payment goes out on the 5th of each month, and the payment details should be staying the same.
If I complete on the 18th of December, my question is, will my first payment on the 5th of January be larger than normal or not?? (Actually it should reduce due to the smaller mortgage size.)
Normally if you get a mortage, say mid-way through a month, then I understand that the first payment has to cover the interest for the arrears of the partial month, then the payment in advance for the first full month, which is why it is 1.5x normal payment.
In this situation though, my December payment pays the interest for the whole of December, so the January one should be as normal should it not??
I can't really get my head around this, so could anyone offer some advice?
I currently have a mortgage, but I'm re-mortgaging, with the same lender, on the same deal, just making a big overpayment so the new mortgage will be for a smaller amount. Effectively this means that the old mortgage is redeemed by the new mortgage + capital. My payment goes out on the 5th of each month, and the payment details should be staying the same.
If I complete on the 18th of December, my question is, will my first payment on the 5th of January be larger than normal or not?? (Actually it should reduce due to the smaller mortgage size.)
Normally if you get a mortage, say mid-way through a month, then I understand that the first payment has to cover the interest for the arrears of the partial month, then the payment in advance for the first full month, which is why it is 1.5x normal payment.
In this situation though, my December payment pays the interest for the whole of December, so the January one should be as normal should it not??
jamesc_1729 said:
I currently have a mortgage, but I'm re-mortgaging, with the same lender, on the same deal, just making a big overpayment so the new mortgage will be for a smaller amount.
My December payment pays the interest for the whole of December, so the January one should be as normal should it not??
So same lender, same interest rate, just making a big overpayment? My December payment pays the interest for the whole of December, so the January one should be as normal should it not??
Often the lender will give you the choice of either paying less each month & the mortgage will run is current term OR you can pay the same each month & the term will reduce as your paying it off quicker. Best bet, as mentioned above, give them a call & they will explain everything.
The lender will tell you what the first payment will be, but it will be more just like you said in the example. You previous mortgage will be redeemed, so first payment will include interest from previous month, since redemption.
Edit to say, if your just doing a product switch, then you won't be redeeming mortgage, so shouldn't have a higher first payment. Give them a call, that's the easiest thing to do.
Edit to say, if your just doing a product switch, then you won't be redeeming mortgage, so shouldn't have a higher first payment. Give them a call, that's the easiest thing to do.
Edited by Trax on Tuesday 1st December 18:57
Gassing Station | Finance | Top of Page | What's New | My Stuff