How long after closing is the first payment due?

After closing, despite being content with finally owning a new property, many buyers can be confused at the prospect of trying to figure out when their first mortgage payment is due.

Mortgage payments work differently to other transactions and bills that you may have paid previous to buying a house. This is because mortgage payments are made in arrears.

What does paid in arrears mean? 

Unlike with rent, for example, mortgage payments are made for the month previous, rather than for the coming month. This is essentially what ‘arrears’ means as you are paying for time that has already elapsed rather than paying in advance.

When is the first payment due?

Your first mortgage will be due on the first day of the month which falls after your first 30 days of owning the new property. This means that when you close can affect how long you have before having to make this first payment. For example, if you close on May 3rd, your first payment will not be due until July 1st.

Although closing at the beginning of the month gives you more time until your first payment, it does not mean that you are avoiding or missing out on a month of payments. You will have to pay the interest for the month of May in advance and thus you will be required to have more funds available at the point of closing the deal on your new property. Consequently, there are both advantages and inconveniences of choosing to close early on in the month.

Can you make your first payment early?

There is no doubt that paying early also has its own advantages. Whilst some banks ask for payment on the first of every month, others are more flexible. One way to help yourself is by making your payment a couple of days early every month so that within a few months you will be a month ahead in payments. Paying early will also help you to avoid paying more interest across the total duration of the loan which you have taken out. However, one thing to bear in mind is that some banks do charge a fee if you pay back your whole loan too early. This is due to the fact that the mortgage companies want to collect more interest over the course of your loan.

How do I make my first payment?

Gone are the days of mailing a check a week in advance so that it gets to your lender in time for the beginning of the month. Nowadays, you can use the internet or an app (if your lender has one) to make easy, stress-free payments. You can even schedule to pay at a certain time every month so that your payments are immediately taken from your account on a monthly basis. It couldn’t be easier to make your first payment and carry on making your mortgage payment deadline every month!