A common question when taking out a new mortgage is; why is my first payment higher than the subsequent ones?

The first mortgage payment is often higher than subsequent payments due to the way mortgage interest is calculated and when it begins to accrue. Here are the reasons this happens:

Interest Accrual: Mortgage interest typically begins accruing from the day the loan is disbursed. So, even though you may not make your first payment until a month after completing, interest for that first month has already accrued. Therefore, your first payment includes not only a portion of the capital but also the accrued interest for the first partial month.

Timing of Payments: Depending on when you complete on your mortgage relative to the end of the month, your first payment may cover a longer period of time than subsequent payments. For example, if you complete on your mortgage on the 15th of the month, your first payment may include interest for the remainder of that month as well as the full payment for the next month.