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You're finally in your new home, now what happens? 

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First mortgage payments will often be higher than your usual monthly payment. This is something that caught me off guard when I bought my first home and caused a lot of stress. So, it's something I try to always bring up with my clients to avoid that nasty shock. 

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Why is it higher? 

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Interest on a mortgage is charged daily and is chargeable from your completion date. 

 

However, by law, your first direct debit cannot be taken for a minimum of 14 days from the day you are given notice of payment, and in most cases a preferred payment date is selected during the mortgage application.

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After you complete you will be sent a letter from the lender which will detail your first mortgage payment, this is when you will have the confirmed amount to be paid.

 

The first payment will include the interest accrued during the month you completed on the purchase and the following months payment.  

 

As an example, If you complete on the purchase of your new home on May 3rd and have selected a preferred payment date of the 1st of the month, your first mortgage payment will be on June 1st but will include both May (for the 28-days of interest) and Junes payment. It may feel like a double payment, but really it will be an accurate charge, to the day.

 

What I would always recommend is to set aside the payment for the month you move as if it's a full months mortgage payment. This way you will have provisioned for the higher payment the next month and if there is anything left over then all the better.