Mortgage Advisers
Your First Remortgage Payment
Your first remortgage payment with a new lender may feel a little uncomfortable. We're switching from one lender to another and so if your mortgage payment usually comes out on the first of the month and then your new mortgage completes around the first, there will be some crossover. In this article I'll explain what to expect.
Your existing lending will continue as normal in most cases; they will take payment for your old mortgage on the designated day, usually around the 1st unless specified differently.
As mortgage payments are taken upfront for the month, they will be expecting the payment to be at your standard variable rate, so this payment will likely be a bit higher than usual.
Once completion is confirmed to have taken place, your old lender will receive payment for the outstanding balance of the mortgage.
This repayment of the mortgage will take them a few days to register. Once they have registered the full repayment of the mortgage, the monthly payment (less any interest accrued if completion is delayed for any reason) will be refunded.
With the new lender, interest will be charged from the day of completion, just the same as when you first took out the mortgage.
Your new lender will not take payment on the same day as completion. Direct Debit rules stipulate that you must be given two weeks' notice before a new lender can take payment.
You might notice this with things like car insurance, where they ask you to make the first payment upfront by card, then the direct debit kicks in for the next full month.
This first mortgage payment from the new lender will be taken once your old lender's payment has been refunded. So, in simple terms:
Your old mortgage provider will take the mortgage payment as usual, but this will be refunded before your new lender's first payment is taken.
It will all work its way out in the first month, but when you see the old lender's payment come out on the 1st as usual, and for a slightly higher amount, it can be quite unnerving — don't worry, you will not be charged two mortgage payments this month.
If you have requested additional funds from your remortgage, these will be deposited directly into your account following completion.
In the event that you are consolidating a second charge loan, the new lender will usually repay that lender directly, in the same way they repay your old mortgage lender.
