diff --git a/chainreg/chainregistry.go b/chainreg/chainregistry.go
index dbe374c4e..309238505 100644
--- a/chainreg/chainregistry.go
+++ b/chainreg/chainregistry.go
@@ -25,7 +25,7 @@ import (
 	"github.com/lightningnetwork/lnd/chainntnfs/btcdnotify"
 	"github.com/lightningnetwork/lnd/chainntnfs/neutrinonotify"
 	"github.com/lightningnetwork/lnd/channeldb"
-	"github.com/lightningnetwork/lnd/htlcswitch"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/input"
 	"github.com/lightningnetwork/lnd/keychain"
 	"github.com/lightningnetwork/lnd/kvdb"
@@ -195,7 +195,7 @@ type PartialChainControl struct {
 	ChainSource chain.Interface
 
 	// RoutingPolicy is the routing policy we have decided to use.
-	RoutingPolicy htlcswitch.ForwardingPolicy
+	RoutingPolicy models.ForwardingPolicy
 
 	// MinHtlcIn is the minimum HTLC we will accept.
 	MinHtlcIn lnwire.MilliSatoshi
@@ -270,7 +270,7 @@ func NewPartialChainControl(cfg *Config) (*PartialChainControl, func(), error) {
 
 	switch cfg.PrimaryChain() {
 	case BitcoinChain:
-		cc.RoutingPolicy = htlcswitch.ForwardingPolicy{
+		cc.RoutingPolicy = models.ForwardingPolicy{
 			MinHTLCOut:    cfg.Bitcoin.MinHTLCOut,
 			BaseFee:       cfg.Bitcoin.BaseFee,
 			FeeRate:       cfg.Bitcoin.FeeRate,
@@ -282,7 +282,7 @@ func NewPartialChainControl(cfg *Config) (*PartialChainControl, func(), error) {
 			DefaultBitcoinStaticMinRelayFeeRate,
 		)
 	case LitecoinChain:
-		cc.RoutingPolicy = htlcswitch.ForwardingPolicy{
+		cc.RoutingPolicy = models.ForwardingPolicy{
 			MinHTLCOut:    cfg.Litecoin.MinHTLCOut,
 			BaseFee:       cfg.Litecoin.BaseFee,
 			FeeRate:       cfg.Litecoin.FeeRate,
diff --git a/channeldb/db.go b/channeldb/db.go
index 7515d1ae5..18a66c46e 100644
--- a/channeldb/db.go
+++ b/channeldb/db.go
@@ -312,11 +312,6 @@ var (
 	// channelOpeningState for each channel that is currently in the process
 	// of being opened.
 	channelOpeningStateBucket = []byte("channelOpeningState")
-
-	// initialChannelFwdingPolicyBucket is the database bucket used to store
-	// the forwarding policy for each permanent channel that is currently
-	// in the process of being opened.
-	initialChannelFwdingPolicyBucket = []byte("initialChannelFwdingPolicy")
 )
 
 // DB is the primary datastore for the lnd daemon. The database stores
@@ -1433,64 +1428,6 @@ func (c *ChannelStateDB) AbandonChannel(chanPoint *wire.OutPoint,
 	return dbChan.CloseChannel(summary, ChanStatusLocalCloseInitiator)
 }
 
-// SaveInitialFwdingPolicy saves the serialized forwarding policy for the
-// provided permanent channel id to the initialChannelFwdingPolicyBucket.
-func (c *ChannelStateDB) SaveInitialFwdingPolicy(chanID,
-	forwardingPolicy []byte) error {
-
-	return kvdb.Update(c.backend, func(tx kvdb.RwTx) error {
-		bucket, err := tx.CreateTopLevelBucket(
-			initialChannelFwdingPolicyBucket,
-		)
-		if err != nil {
-			return err
-		}
-
-		return bucket.Put(chanID, forwardingPolicy)
-	}, func() {})
-}
-
-// GetInitialFwdingPolicy fetches the serialized forwarding policy for the
-// provided channel id from the database, or returns ErrChannelNotFound if
-// a forwarding policy for this channel id is not found.
-func (c *ChannelStateDB) GetInitialFwdingPolicy(chanID []byte) ([]byte, error) {
-	var serializedState []byte
-	err := kvdb.View(c.backend, func(tx kvdb.RTx) error {
-		bucket := tx.ReadBucket(initialChannelFwdingPolicyBucket)
-		if bucket == nil {
-			// If the bucket does not exist, it means we
-			// never added a channel fees to the db, so
-			// return ErrChannelNotFound.
-			return ErrChannelNotFound
-		}
-
-		stateBytes := bucket.Get(chanID)
-		if stateBytes == nil {
-			return ErrChannelNotFound
-		}
-
-		serializedState = append(serializedState, stateBytes...)
-
-		return nil
-	}, func() {
-		serializedState = nil
-	})
-	return serializedState, err
-}
-
-// DeleteInitialFwdingPolicy removes the forwarding policy for a given channel
-// from the database.
-func (c *ChannelStateDB) DeleteInitialFwdingPolicy(chanID []byte) error {
-	return kvdb.Update(c.backend, func(tx kvdb.RwTx) error {
-		bucket := tx.ReadWriteBucket(initialChannelFwdingPolicyBucket)
-		if bucket == nil {
-			return ErrChannelNotFound
-		}
-
-		return bucket.Delete(chanID)
-	}, func() {})
-}
-
 // SaveChannelOpeningState saves the serialized channel state for the provided
 // chanPoint to the channelOpeningStateBucket.
 func (c *ChannelStateDB) SaveChannelOpeningState(outPoint,
diff --git a/channeldb/forwarding_policy.go b/channeldb/forwarding_policy.go
new file mode 100644
index 000000000..2a4123045
--- /dev/null
+++ b/channeldb/forwarding_policy.go
@@ -0,0 +1,111 @@
+package channeldb
+
+import (
+	"github.com/lightningnetwork/lnd/channeldb/models"
+	"github.com/lightningnetwork/lnd/kvdb"
+	"github.com/lightningnetwork/lnd/lnwire"
+)
+
+var (
+	// initialChannelForwardingPolicyBucket is the database bucket used to
+	// store the forwarding policy for each permanent channel that is
+	// currently in the process of being opened.
+	initialChannelForwardingPolicyBucket = []byte(
+		"initialChannelFwdingPolicy",
+	)
+)
+
+// SaveInitialForwardingPolicy saves the serialized forwarding policy for the
+// provided permanent channel id to the initialChannelForwardingPolicyBucket.
+func (c *ChannelStateDB) SaveInitialForwardingPolicy(chanID lnwire.ChannelID,
+	forwardingPolicy *models.ForwardingPolicy) error {
+
+	chanIDCopy := make([]byte, 32)
+	copy(chanIDCopy, chanID[:])
+
+	scratch := make([]byte, 36)
+	byteOrder.PutUint64(scratch[:8], uint64(forwardingPolicy.MinHTLCOut))
+	byteOrder.PutUint64(scratch[8:16], uint64(forwardingPolicy.MaxHTLC))
+	byteOrder.PutUint64(scratch[16:24], uint64(forwardingPolicy.BaseFee))
+	byteOrder.PutUint64(scratch[24:32], uint64(forwardingPolicy.FeeRate))
+	byteOrder.PutUint32(scratch[32:], forwardingPolicy.TimeLockDelta)
+
+	return kvdb.Update(c.backend, func(tx kvdb.RwTx) error {
+		bucket, err := tx.CreateTopLevelBucket(
+			initialChannelForwardingPolicyBucket,
+		)
+		if err != nil {
+			return err
+		}
+
+		return bucket.Put(chanIDCopy, scratch)
+	}, func() {})
+}
+
+// GetInitialForwardingPolicy fetches the serialized forwarding policy for the
+// provided channel id from the database, or returns ErrChannelNotFound if
+// a forwarding policy for this channel id is not found.
+func (c *ChannelStateDB) GetInitialForwardingPolicy(
+	chanID lnwire.ChannelID) (*models.ForwardingPolicy, error) {
+
+	chanIDCopy := make([]byte, 32)
+	copy(chanIDCopy, chanID[:])
+
+	var forwardingPolicy *models.ForwardingPolicy
+	err := kvdb.View(c.backend, func(tx kvdb.RTx) error {
+		bucket := tx.ReadBucket(initialChannelForwardingPolicyBucket)
+		if bucket == nil {
+			// If the bucket does not exist, it means we
+			// never added a channel fees to the db, so
+			// return ErrChannelNotFound.
+			return ErrChannelNotFound
+		}
+
+		stateBytes := bucket.Get(chanIDCopy)
+		if stateBytes == nil {
+			return ErrChannelNotFound
+		}
+
+		forwardingPolicy = &models.ForwardingPolicy{
+			MinHTLCOut: lnwire.MilliSatoshi(
+				byteOrder.Uint64(stateBytes[:8]),
+			),
+			MaxHTLC: lnwire.MilliSatoshi(
+				byteOrder.Uint64(stateBytes[8:16]),
+			),
+			BaseFee: lnwire.MilliSatoshi(
+				byteOrder.Uint64(stateBytes[16:24]),
+			),
+			FeeRate: lnwire.MilliSatoshi(
+				byteOrder.Uint64(stateBytes[24:32]),
+			),
+			TimeLockDelta: byteOrder.Uint32(stateBytes[32:36]),
+		}
+
+		return nil
+	}, func() {
+		forwardingPolicy = nil
+	})
+
+	return forwardingPolicy, err
+}
+
+// DeleteInitialForwardingPolicy removes the forwarding policy for a given
+// channel from the database.
+func (c *ChannelStateDB) DeleteInitialForwardingPolicy(
+	chanID lnwire.ChannelID) error {
+
+	chanIDCopy := make([]byte, 32)
+	copy(chanIDCopy, chanID[:])
+
+	return kvdb.Update(c.backend, func(tx kvdb.RwTx) error {
+		bucket := tx.ReadWriteBucket(
+			initialChannelForwardingPolicyBucket,
+		)
+		if bucket == nil {
+			return ErrChannelNotFound
+		}
+
+		return bucket.Delete(chanIDCopy)
+	}, func() {})
+}
diff --git a/channeldb/models/channel.go b/channeldb/models/channel.go
index d05165309..4a65462e7 100644
--- a/channeldb/models/channel.go
+++ b/channeldb/models/channel.go
@@ -90,3 +90,41 @@ func (k *CircuitKey) Decode(r io.Reader) error {
 func (k CircuitKey) String() string {
 	return fmt.Sprintf("(Chan ID=%s, HTLC ID=%d)", k.ChanID, k.HtlcID)
 }
+
+// ForwardingPolicy describes the set of constraints that a given ChannelLink
+// is to adhere to when forwarding HTLC's. For each incoming HTLC, this set of
+// constraints will be consulted in order to ensure that adequate fees are
+// paid, and our time-lock parameters are respected. In the event that an
+// incoming HTLC violates any of these constraints, it is to be _rejected_ with
+// the error possibly carrying along a ChannelUpdate message that includes the
+// latest policy.
+type ForwardingPolicy struct {
+	// MinHTLCOut is the smallest HTLC that is to be forwarded.
+	MinHTLCOut lnwire.MilliSatoshi
+
+	// MaxHTLC is the largest HTLC that is to be forwarded.
+	MaxHTLC lnwire.MilliSatoshi
+
+	// BaseFee is the base fee, expressed in milli-satoshi that must be
+	// paid for each incoming HTLC. This field, combined with FeeRate is
+	// used to compute the required fee for a given HTLC.
+	BaseFee lnwire.MilliSatoshi
+
+	// FeeRate is the fee rate, expressed in milli-satoshi that must be
+	// paid for each incoming HTLC. This field combined with BaseFee is
+	// used to compute the required fee for a given HTLC.
+	FeeRate lnwire.MilliSatoshi
+
+	// TimeLockDelta is the absolute time-lock value, expressed in blocks,
+	// that will be subtracted from an incoming HTLC's timelock value to
+	// create the time-lock value for the forwarded outgoing HTLC. The
+	// following constraint MUST hold for an HTLC to be forwarded:
+	//
+	//  * incomingHtlc.timeLock - timeLockDelta = fwdInfo.OutgoingCTLV
+	//
+	// where fwdInfo is the forwarding information extracted from the
+	// per-hop payload of the incoming HTLC's onion packet.
+	TimeLockDelta uint32
+
+	// TODO(roasbeef): add fee module inside of switch
+}
diff --git a/funding/manager.go b/funding/manager.go
index 9f78aac06..9fa860a58 100644
--- a/funding/manager.go
+++ b/funding/manager.go
@@ -20,8 +20,8 @@ import (
 	"github.com/lightningnetwork/lnd/chainreg"
 	"github.com/lightningnetwork/lnd/chanacceptor"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/discovery"
-	"github.com/lightningnetwork/lnd/htlcswitch"
 	"github.com/lightningnetwork/lnd/input"
 	"github.com/lightningnetwork/lnd/keychain"
 	"github.com/lightningnetwork/lnd/labels"
@@ -154,7 +154,7 @@ type reservationWithCtx struct {
 	chanAmt btcutil.Amount
 
 	// forwardingPolicy is the policy provided by the initFundingMsg.
-	forwardingPolicy htlcswitch.ForwardingPolicy
+	forwardingPolicy models.ForwardingPolicy
 
 	// Constraints we require for the remote.
 	remoteCsvDelay    uint16
@@ -386,6 +386,9 @@ type Config struct {
 	// so that the channel creation process can be completed.
 	Notifier chainntnfs.ChainNotifier
 
+	// ChannelDB is the database that keeps track of all channel state.
+	ChannelDB *channeldb.ChannelStateDB
+
 	// SignMessage signs an arbitrary message with a given public key. The
 	// actual digest signed is the double sha-256 of the message. In the
 	// case that the private key corresponding to the passed public key
@@ -429,7 +432,7 @@ type Config struct {
 
 	// DefaultRoutingPolicy is the default routing policy used when
 	// initially announcing channels.
-	DefaultRoutingPolicy htlcswitch.ForwardingPolicy
+	DefaultRoutingPolicy models.ForwardingPolicy
 
 	// DefaultMinHtlcIn is the default minimum incoming htlc value that is
 	// set as a channel parameter.
@@ -513,11 +516,6 @@ type Config struct {
 	// transition from pending open to open.
 	NotifyOpenChannelEvent func(wire.OutPoint)
 
-	// UpdateForwardingPolicies is used by the manager to update active
-	// links with a new policy.
-	UpdateForwardingPolicies func(
-		chanPolicies map[wire.OutPoint]htlcswitch.ForwardingPolicy)
-
 	// OpenChannelPredicate is a predicate on the lnwire.OpenChannel message
 	// and on the requesting node's public key that returns a bool which
 	// tells the funding manager whether or not to accept the channel.
@@ -641,7 +639,7 @@ func (c channelOpeningState) String() string {
 	case markedOpen:
 		return "markedOpen"
 	case channelReadySent:
-		return "channelReady"
+		return "channelReadySent"
 	case addedToRouterGraph:
 		return "addedToRouterGraph"
 	default:
@@ -698,7 +696,7 @@ func (f *Manager) start() error {
 	// down.
 	// TODO(roasbeef): store height that funding finished?
 	//  * would then replace call below
-	allChannels, err := f.cfg.Wallet.Cfg.Database.FetchAllChannels()
+	allChannels, err := f.cfg.ChannelDB.FetchAllChannels()
 	if err != nil {
 		return err
 	}
@@ -1153,79 +1151,9 @@ func (f *Manager) stateStep(channel *channeldb.OpenChannel,
 			return nil
 		}
 
-		var peerAlias *lnwire.ShortChannelID
-		if channel.IsZeroConf() {
-			// We'll need to wait until channel_ready has been
-			// received and the peer lets us know the alias they
-			// want to use for the channel. With this information,
-			// we can then construct a ChannelUpdate for them.
-			// If an alias does not yet exist, we'll just return,
-			// letting the next iteration of the loop check again.
-			var defaultAlias lnwire.ShortChannelID
-			chanID := lnwire.NewChanIDFromOutPoint(
-				&channel.FundingOutpoint,
-			)
-			foundAlias, _ := f.cfg.AliasManager.GetPeerAlias(
-				chanID,
-			)
-			if foundAlias == defaultAlias {
-				return nil
-			}
-
-			peerAlias = &foundAlias
-		}
-
-		err = f.addToRouterGraph(channel, shortChanID, peerAlias, nil)
-		if err != nil {
-			return fmt.Errorf("failed adding to "+
-				"router graph: %v", err)
-		}
-
-		// As the channel is now added to the ChannelRouter's topology,
-		// the channel is moved to the next state of the state machine.
-		// It will be moved to the last state (actually deleted from
-		// the database) after the channel is finally announced.
-		err = f.saveChannelOpeningState(
-			&channel.FundingOutpoint, addedToRouterGraph,
-			shortChanID,
+		return f.handleChannelReadyReceived(
+			channel, shortChanID, pendingChanID, updateChan,
 		)
-		if err != nil {
-			return fmt.Errorf("error setting channel state to"+
-				" addedToRouterGraph: %v", err)
-		}
-
-		log.Debugf("Channel(%v) with ShortChanID %v: successfully "+
-			"added to router graph", chanID, shortChanID)
-
-		// Give the caller a final update notifying them that
-		// the channel is now open.
-		// TODO(roasbeef): only notify after recv of channel_ready?
-		fundingPoint := channel.FundingOutpoint
-		cp := &lnrpc.ChannelPoint{
-			FundingTxid: &lnrpc.ChannelPoint_FundingTxidBytes{
-				FundingTxidBytes: fundingPoint.Hash[:],
-			},
-			OutputIndex: fundingPoint.Index,
-		}
-
-		if updateChan != nil {
-			upd := &lnrpc.OpenStatusUpdate{
-				Update: &lnrpc.OpenStatusUpdate_ChanOpen{
-					ChanOpen: &lnrpc.ChannelOpenUpdate{
-						ChannelPoint: cp,
-					},
-				},
-				PendingChanId: pendingChanID[:],
-			}
-
-			select {
-			case updateChan <- upd:
-			case <-f.quit:
-				return ErrFundingManagerShuttingDown
-			}
-		}
-
-		return nil
 
 	// The channel was added to the Router's topology, but the channel
 	// announcement was not sent.
@@ -1263,6 +1191,16 @@ func (f *Manager) stateStep(channel *channeldb.OpenChannel,
 				err)
 		}
 
+		// After the fee parameters have been stored in the
+		// announcement we can delete them from the database. For
+		// private channels we do not announce the channel policy to
+		// the network but still need to delete them from the database.
+		err = f.deleteInitialForwardingPolicy(chanID)
+		if err != nil {
+			log.Infof("Could not delete initial policy for chanId "+
+				"%x", chanID)
+		}
+
 		log.Debugf("Channel(%v) with ShortChanID %v: successfully "+
 			"announced", chanID, shortChanID)
 
@@ -1396,7 +1334,7 @@ func (f *Manager) handleFundingOpen(peer lnpeer.Peer,
 
 	// Also count the channels that are already pending. There we don't know
 	// the underlying intent anymore, unfortunately.
-	channels, err := f.cfg.Wallet.Cfg.Database.FetchOpenChannels(peerPubKey)
+	channels, err := f.cfg.ChannelDB.FetchOpenChannels(peerPubKey)
 	if err != nil {
 		f.failFundingFlow(peer, cid, err)
 		return
@@ -1423,7 +1361,7 @@ func (f *Manager) handleFundingOpen(peer lnpeer.Peer,
 	}
 
 	// Ensure that the pendingChansLimit is respected.
-	pendingChans, err := f.cfg.Wallet.Cfg.Database.FetchPendingChannels()
+	pendingChans, err := f.cfg.ChannelDB.FetchPendingChannels()
 	if err != nil {
 		f.failFundingFlow(peer, cid, err)
 		return
@@ -1744,13 +1682,13 @@ func (f *Manager) handleFundingOpen(peer lnpeer.Peer,
 		minHtlc = acceptorResp.MinHtlcIn
 	}
 
-	// If we are handling a FundingOpen request then we need to
-	// specify the default channel fees since they are not provided
-	// by the responder interactively.
-	forwardingPolicy := htlcswitch.ForwardingPolicy{
-		BaseFee: f.cfg.DefaultRoutingPolicy.BaseFee,
-		FeeRate: f.cfg.DefaultRoutingPolicy.FeeRate,
-	}
+	// If we are handling a FundingOpen request then we need to specify the
+	// default channel fees since they are not provided by the responder
+	// interactively.
+	ourContribution := reservation.OurContribution()
+	forwardingPolicy := f.defaultForwardingPolicy(
+		ourContribution.ChannelConstraints,
+	)
 
 	// Once the reservation has been created successfully, we add it to
 	// this peer's map of pending reservations to track this particular
@@ -1762,7 +1700,7 @@ func (f *Manager) handleFundingOpen(peer lnpeer.Peer,
 	resCtx := &reservationWithCtx{
 		reservation:       reservation,
 		chanAmt:           amt,
-		forwardingPolicy:  forwardingPolicy,
+		forwardingPolicy:  *forwardingPolicy,
 		remoteCsvDelay:    remoteCsvDelay,
 		remoteMinHtlc:     minHtlc,
 		remoteMaxValue:    remoteMaxValue,
@@ -1825,7 +1763,6 @@ func (f *Manager) handleFundingOpen(peer lnpeer.Peer,
 
 	// With the initiator's contribution recorded, respond with our
 	// contribution in the next message of the workflow.
-	ourContribution := reservation.OurContribution()
 	fundingAccept := lnwire.AcceptChannel{
 		PendingChannelID:      msg.PendingChannelID,
 		DustLimit:             ourContribution.DustLimit,
@@ -2370,7 +2307,7 @@ func (f *Manager) handleFundingCreated(peer lnpeer.Peer,
 	// With a permanent channel id established we can save the respective
 	// forwarding policy in the database. In the channel announcement phase
 	// this forwarding policy is retrieved and applied.
-	err = f.saveInitialFwdingPolicy(cid.chanID, &forwardingPolicy)
+	err = f.saveInitialForwardingPolicy(cid.chanID, &forwardingPolicy)
 	if err != nil {
 		log.Errorf("Unable to store the forwarding policy: %v", err)
 	}
@@ -2473,7 +2410,9 @@ func (f *Manager) handleFundingSigned(peer lnpeer.Peer,
 	// We have to store the forwardingPolicy before the reservation context
 	// is deleted. The policy will then be read and applied in
 	// newChanAnnouncement.
-	err = f.saveInitialFwdingPolicy(permChanID, &resCtx.forwardingPolicy)
+	err = f.saveInitialForwardingPolicy(
+		permChanID, &resCtx.forwardingPolicy,
+	)
 	if err != nil {
 		log.Errorf("Unable to store the forwarding policy: %v", err)
 	}
@@ -3131,6 +3070,8 @@ func (f *Manager) receivedChannelReady(node *btcec.PublicKey,
 		return false, err
 	}
 
+	// If we cannot find the channel, then we haven't processed the
+	// remote's channelReady message.
 	channel, err := f.cfg.FindChannel(node, chanID)
 	if err != nil {
 		log.Errorf("Unable to locate ChannelID(%v) to determine if "+
@@ -3138,7 +3079,18 @@ func (f *Manager) receivedChannelReady(node *btcec.PublicKey,
 		return false, err
 	}
 
-	return channel.RemoteNextRevocation != nil, nil
+	// If we haven't insert the next revocation point, we haven't finished
+	// processing the channel ready message.
+	if channel.RemoteNextRevocation == nil {
+		return false, nil
+	}
+
+	// Finally, the barrier signal is removed once we finish
+	// `handleChannelReady`. If we can still find the signal, we haven't
+	// finished processing it yet.
+	_, loaded := f.handleChannelReadyBarriers.Load(chanID)
+
+	return !loaded, nil
 }
 
 // extractAnnounceParams extracts the various channel announcement and update
@@ -3242,28 +3194,6 @@ func (f *Manager) addToRouterGraph(completeChan *channeldb.OpenChannel,
 		return ErrFundingManagerShuttingDown
 	}
 
-	// The user can define non-default channel policies when opening a
-	// channel. They are stored in the database to be persisted from the
-	// moment of funding the channel to it being confirmed. We just
-	// announced those policies to the network, but we also need to update
-	// our local policy in the switch to make sure we can forward payments
-	// with the correct fees. We can't do this when creating the link
-	// initially as that only takes the static channel parameters.
-	updatedPolicy := map[wire.OutPoint]htlcswitch.ForwardingPolicy{
-		completeChan.FundingOutpoint: {
-			MinHTLCOut: ann.chanUpdateAnn.HtlcMinimumMsat,
-			MaxHTLC:    ann.chanUpdateAnn.HtlcMaximumMsat,
-			BaseFee: lnwire.MilliSatoshi(
-				ann.chanUpdateAnn.BaseFee,
-			),
-			FeeRate: lnwire.MilliSatoshi(
-				ann.chanUpdateAnn.FeeRate,
-			),
-			TimeLockDelta: uint32(ann.chanUpdateAnn.TimeLockDelta),
-		},
-	}
-	f.cfg.UpdateForwardingPolicies(updatedPolicy)
-
 	return nil
 }
 
@@ -3309,15 +3239,6 @@ func (f *Manager) annAfterSixConfs(completeChan *channeldb.OpenChannel,
 			return fmt.Errorf("unable to send node announcement "+
 				"to peer %x: %v", pubKey, err)
 		}
-
-		// For private channels we do not announce the channel policy
-		// to the network but still need to delete them from the
-		// database.
-		err = f.deleteInitialFwdingPolicy(chanID)
-		if err != nil {
-			log.Infof("Could not delete channel fees "+
-				"for chanId %x.", chanID)
-		}
 	} else {
 		// Otherwise, we'll wait until the funding transaction has
 		// reached 6 confirmations before announcing it.
@@ -3707,6 +3628,13 @@ func (f *Manager) handleChannelReady(peer lnpeer.Peer,
 		}
 	}()
 
+	// Before we can add the channel to the peer, we'll need to ensure that
+	// we have an initial forwarding policy set.
+	if err := f.ensureInitialForwardingPolicy(chanID, channel); err != nil {
+		log.Errorf("Unable to ensure initial forwarding policy: %v",
+			err)
+	}
+
 	if err := peer.AddNewChannel(channel, f.quit); err != nil {
 		log.Errorf("Unable to add new channel %v with peer %x: %v",
 			channel.FundingOutpoint,
@@ -3715,6 +3643,132 @@ func (f *Manager) handleChannelReady(peer lnpeer.Peer,
 	}
 }
 
+// handleChannelReadyReceived is called once the remote's channelReady message
+// is received and processed. At this stage, we must have sent out our
+// channelReady message, once the remote's channelReady is processed, the
+// channel is now active, thus we change its state to `addedToRouterGraph` to
+// let the channel start handling routing.
+func (f *Manager) handleChannelReadyReceived(channel *channeldb.OpenChannel,
+	scid *lnwire.ShortChannelID, pendingChanID [32]byte,
+	updateChan chan<- *lnrpc.OpenStatusUpdate) error {
+
+	chanID := lnwire.NewChanIDFromOutPoint(&channel.FundingOutpoint)
+
+	var peerAlias *lnwire.ShortChannelID
+	if channel.IsZeroConf() {
+		// We'll need to wait until channel_ready has been received and
+		// the peer lets us know the alias they want to use for the
+		// channel. With this information, we can then construct a
+		// ChannelUpdate for them.  If an alias does not yet exist,
+		// we'll just return, letting the next iteration of the loop
+		// check again.
+		var defaultAlias lnwire.ShortChannelID
+		chanID := lnwire.NewChanIDFromOutPoint(&channel.FundingOutpoint)
+		foundAlias, _ := f.cfg.AliasManager.GetPeerAlias(chanID)
+		if foundAlias == defaultAlias {
+			return nil
+		}
+
+		peerAlias = &foundAlias
+	}
+
+	err := f.addToRouterGraph(channel, scid, peerAlias, nil)
+	if err != nil {
+		return fmt.Errorf("failed adding to router graph: %w", err)
+	}
+
+	// As the channel is now added to the ChannelRouter's topology, the
+	// channel is moved to the next state of the state machine. It will be
+	// moved to the last state (actually deleted from the database) after
+	// the channel is finally announced.
+	err = f.saveChannelOpeningState(
+		&channel.FundingOutpoint, addedToRouterGraph, scid,
+	)
+	if err != nil {
+		return fmt.Errorf("error setting channel state to"+
+			" addedToRouterGraph: %w", err)
+	}
+
+	log.Debugf("Channel(%v) with ShortChanID %v: successfully "+
+		"added to router graph", chanID, scid)
+
+	// Give the caller a final update notifying them that the channel is
+	fundingPoint := channel.FundingOutpoint
+	cp := &lnrpc.ChannelPoint{
+		FundingTxid: &lnrpc.ChannelPoint_FundingTxidBytes{
+			FundingTxidBytes: fundingPoint.Hash[:],
+		},
+		OutputIndex: fundingPoint.Index,
+	}
+
+	if updateChan != nil {
+		upd := &lnrpc.OpenStatusUpdate{
+			Update: &lnrpc.OpenStatusUpdate_ChanOpen{
+				ChanOpen: &lnrpc.ChannelOpenUpdate{
+					ChannelPoint: cp,
+				},
+			},
+			PendingChanId: pendingChanID[:],
+		}
+
+		select {
+		case updateChan <- upd:
+		case <-f.quit:
+			return ErrFundingManagerShuttingDown
+		}
+	}
+
+	return nil
+}
+
+// ensureInitialForwardingPolicy ensures that we have an initial forwarding
+// policy set for the given channel. If we don't, we'll fall back to the default
+// values.
+func (f *Manager) ensureInitialForwardingPolicy(chanID lnwire.ChannelID,
+	channel *channeldb.OpenChannel) error {
+
+	// Before we can add the channel to the peer, we'll need to ensure that
+	// we have an initial forwarding policy set. This should always be the
+	// case except for a channel that was created with lnd <= 0.15.5 and
+	// is still pending while updating to this version.
+	var needDBUpdate bool
+	forwardingPolicy, err := f.getInitialForwardingPolicy(chanID)
+	if err != nil {
+		log.Errorf("Unable to fetch initial forwarding policy, "+
+			"falling back to default values: %v", err)
+
+		forwardingPolicy = f.defaultForwardingPolicy(
+			channel.LocalChanCfg.ChannelConstraints,
+		)
+		needDBUpdate = true
+	}
+
+	// We only started storing the actual values for MinHTLCOut and MaxHTLC
+	// after 0.16.x, so if a channel was opened with such a version and is
+	// still pending while updating to this version, we'll need to set the
+	// values to the default values.
+	if forwardingPolicy.MinHTLCOut == 0 {
+		forwardingPolicy.MinHTLCOut = channel.LocalChanCfg.MinHTLC
+		needDBUpdate = true
+	}
+	if forwardingPolicy.MaxHTLC == 0 {
+		forwardingPolicy.MaxHTLC = channel.LocalChanCfg.MaxPendingAmount
+		needDBUpdate = true
+	}
+
+	// And finally, if we found that the values currently stored aren't
+	// sufficient for the link, we'll update the database.
+	if needDBUpdate {
+		err := f.saveInitialForwardingPolicy(chanID, forwardingPolicy)
+		if err != nil {
+			return fmt.Errorf("unable to update initial "+
+				"forwarding policy: %v", err)
+		}
+	}
+
+	return nil
+}
+
 // chanAnnouncement encapsulates the two authenticated announcements that we
 // send out to the network after a new channel has been created locally.
 type chanAnnouncement struct {
@@ -3816,7 +3870,7 @@ func (f *Manager) newChanAnnouncement(localPubKey,
 	// forwarding policy to be announced. If no persisted initial policy
 	// values are found, then we will use the default policy values in the
 	// channel announcement.
-	storedFwdingPolicy, err := f.getInitialFwdingPolicy(chanID)
+	storedFwdingPolicy, err := f.getInitialForwardingPolicy(chanID)
 	if err != nil && !errors.Is(err, channeldb.ErrChannelNotFound) {
 		return nil, errors.Errorf("unable to generate channel "+
 			"update announcement: %v", err)
@@ -3946,14 +4000,6 @@ func (f *Manager) announceChannel(localIDKey, remoteIDKey *btcec.PublicKey,
 		return err
 	}
 
-	// After the fee parameters have been stored in the announcement
-	// we can delete them from the database.
-	err = f.deleteInitialFwdingPolicy(chanID)
-	if err != nil {
-		log.Infof("Could not delete channel fees for chanId %x.",
-			chanID)
-	}
-
 	// We only send the channel proof announcement and the node announcement
 	// because addToRouterGraph previously sent the ChannelAnnouncement and
 	// the ChannelUpdate announcement messages. The channel proof and node
@@ -4279,14 +4325,16 @@ func (f *Manager) handleInitFundingMsg(msg *InitFundingMsg) {
 		maxHtlcs = f.cfg.RequiredRemoteMaxHTLCs(capacity)
 	}
 
-	// Prepare the optional channel fee values from the initFundingMsg.
-	// If useBaseFee or useFeeRate are false the client did not
-	// provide fee values hence we assume default fee settings from
-	// the config.
-	forwardingPolicy := htlcswitch.ForwardingPolicy{
-		BaseFee: f.cfg.DefaultRoutingPolicy.BaseFee,
-		FeeRate: f.cfg.DefaultRoutingPolicy.FeeRate,
-	}
+	// Once the reservation has been created, and indexed, queue a funding
+	// request to the remote peer, kicking off the funding workflow.
+	ourContribution := reservation.OurContribution()
+
+	// Prepare the optional channel fee values from the initFundingMsg. If
+	// useBaseFee or useFeeRate are false the client did not provide fee
+	// values hence we assume default fee settings from the config.
+	forwardingPolicy := f.defaultForwardingPolicy(
+		ourContribution.ChannelConstraints,
+	)
 	if baseFee != nil {
 		forwardingPolicy.BaseFee = lnwire.MilliSatoshi(*baseFee)
 	}
@@ -4295,10 +4343,6 @@ func (f *Manager) handleInitFundingMsg(msg *InitFundingMsg) {
 		forwardingPolicy.FeeRate = lnwire.MilliSatoshi(*feeRate)
 	}
 
-	// Once the reservation has been created, and indexed, queue a funding
-	// request to the remote peer, kicking off the funding workflow.
-	ourContribution := reservation.OurContribution()
-
 	// Fetch our dust limit which is part of the default channel
 	// constraints, and log it.
 	ourDustLimit := ourContribution.DustLimit
@@ -4324,7 +4368,7 @@ func (f *Manager) handleInitFundingMsg(msg *InitFundingMsg) {
 
 	resCtx := &reservationWithCtx{
 		chanAmt:           capacity,
-		forwardingPolicy:  forwardingPolicy,
+		forwardingPolicy:  *forwardingPolicy,
 		remoteCsvDelay:    remoteCsvDelay,
 		remoteMinHtlc:     minHtlcIn,
 		remoteMaxValue:    maxValue,
@@ -4618,65 +4662,43 @@ func copyPubKey(pub *btcec.PublicKey) *btcec.PublicKey {
 	return btcec.NewPublicKey(&tmp.X, &tmp.Y)
 }
 
-// saveInitialFwdingPolicy saves the forwarding policy for the provided
+// defaultForwardingPolicy returns the default forwarding policy based on the
+// default routing policy and our local channel constraints.
+func (f *Manager) defaultForwardingPolicy(
+	constraints channeldb.ChannelConstraints) *models.ForwardingPolicy {
+
+	return &models.ForwardingPolicy{
+		MinHTLCOut:    constraints.MinHTLC,
+		MaxHTLC:       constraints.MaxPendingAmount,
+		BaseFee:       f.cfg.DefaultRoutingPolicy.BaseFee,
+		FeeRate:       f.cfg.DefaultRoutingPolicy.FeeRate,
+		TimeLockDelta: f.cfg.DefaultRoutingPolicy.TimeLockDelta,
+	}
+}
+
+// saveInitialForwardingPolicy saves the forwarding policy for the provided
 // chanPoint in the channelOpeningStateBucket.
-func (f *Manager) saveInitialFwdingPolicy(permChanID lnwire.ChannelID,
-	forwardingPolicy *htlcswitch.ForwardingPolicy) error {
+func (f *Manager) saveInitialForwardingPolicy(chanID lnwire.ChannelID,
+	forwardingPolicy *models.ForwardingPolicy) error {
 
-	chanID := make([]byte, 32)
-	copy(chanID, permChanID[:])
-
-	scratch := make([]byte, 36)
-	byteOrder.PutUint64(scratch[:8], uint64(forwardingPolicy.MinHTLCOut))
-	byteOrder.PutUint64(scratch[8:16], uint64(forwardingPolicy.MaxHTLC))
-	byteOrder.PutUint64(scratch[16:24], uint64(forwardingPolicy.BaseFee))
-	byteOrder.PutUint64(scratch[24:32], uint64(forwardingPolicy.FeeRate))
-	byteOrder.PutUint32(scratch[32:], forwardingPolicy.TimeLockDelta)
-
-	return f.cfg.Wallet.Cfg.Database.SaveInitialFwdingPolicy(
-		chanID, scratch,
+	return f.cfg.ChannelDB.SaveInitialForwardingPolicy(
+		chanID, forwardingPolicy,
 	)
 }
 
-// getInitialFwdingPolicy fetches the initial forwarding policy for a given
+// getInitialForwardingPolicy fetches the initial forwarding policy for a given
 // channel id from the database which will be applied during the channel
 // announcement phase.
-func (f *Manager) getInitialFwdingPolicy(permChanID lnwire.ChannelID) (
-	*htlcswitch.ForwardingPolicy, error) {
+func (f *Manager) getInitialForwardingPolicy(
+	chanID lnwire.ChannelID) (*models.ForwardingPolicy, error) {
 
-	chanID := make([]byte, 32)
-	copy(chanID, permChanID[:])
-
-	value, err := f.cfg.Wallet.Cfg.Database.GetInitialFwdingPolicy(chanID)
-	if err != nil {
-		return nil, err
-	}
-
-	var fwdingPolicy htlcswitch.ForwardingPolicy
-	fwdingPolicy.MinHTLCOut = lnwire.MilliSatoshi(
-		byteOrder.Uint64(value[:8]),
-	)
-	fwdingPolicy.MaxHTLC = lnwire.MilliSatoshi(
-		byteOrder.Uint64(value[8:16]),
-	)
-	fwdingPolicy.BaseFee = lnwire.MilliSatoshi(
-		byteOrder.Uint64(value[16:24]),
-	)
-	fwdingPolicy.FeeRate = lnwire.MilliSatoshi(
-		byteOrder.Uint64(value[24:32]),
-	)
-	fwdingPolicy.TimeLockDelta = byteOrder.Uint32(value[32:36])
-
-	return &fwdingPolicy, nil
+	return f.cfg.ChannelDB.GetInitialForwardingPolicy(chanID)
 }
 
-// deleteInitialFwdingPolicy removes channel fees for this chanID from
+// deleteInitialForwardingPolicy removes channel fees for this chanID from
 // the database.
-func (f *Manager) deleteInitialFwdingPolicy(permChanID lnwire.ChannelID) error {
-	chanID := make([]byte, 32)
-	copy(chanID, permChanID[:])
-
-	return f.cfg.Wallet.Cfg.Database.DeleteInitialFwdingPolicy(chanID)
+func (f *Manager) deleteInitialForwardingPolicy(chanID lnwire.ChannelID) error {
+	return f.cfg.ChannelDB.DeleteInitialForwardingPolicy(chanID)
 }
 
 // saveChannelOpeningState saves the channelOpeningState for the provided
@@ -4694,7 +4716,8 @@ func (f *Manager) saveChannelOpeningState(chanPoint *wire.OutPoint,
 	scratch := make([]byte, 10)
 	byteOrder.PutUint16(scratch[:2], uint16(state))
 	byteOrder.PutUint64(scratch[2:], shortChanID.ToUint64())
-	return f.cfg.Wallet.Cfg.Database.SaveChannelOpeningState(
+
+	return f.cfg.ChannelDB.SaveChannelOpeningState(
 		outpointBytes.Bytes(), scratch,
 	)
 }
@@ -4710,7 +4733,7 @@ func (f *Manager) getChannelOpeningState(chanPoint *wire.OutPoint) (
 		return 0, nil, err
 	}
 
-	value, err := f.cfg.Wallet.Cfg.Database.GetChannelOpeningState(
+	value, err := f.cfg.ChannelDB.GetChannelOpeningState(
 		outpointBytes.Bytes(),
 	)
 	if err != nil {
@@ -4729,7 +4752,7 @@ func (f *Manager) deleteChannelOpeningState(chanPoint *wire.OutPoint) error {
 		return err
 	}
 
-	return f.cfg.Wallet.Cfg.Database.DeleteChannelOpeningState(
+	return f.cfg.ChannelDB.DeleteChannelOpeningState(
 		outpointBytes.Bytes(),
 	)
 }
diff --git a/funding/manager_test.go b/funding/manager_test.go
index df6d8cf22..f9e3b2b18 100644
--- a/funding/manager_test.go
+++ b/funding/manager_test.go
@@ -7,6 +7,7 @@ import (
 	"fmt"
 	"net"
 	"path/filepath"
+	"reflect"
 	"runtime"
 	"strings"
 	"testing"
@@ -22,15 +23,16 @@ import (
 	"github.com/lightningnetwork/lnd/chainreg"
 	acpt "github.com/lightningnetwork/lnd/chanacceptor"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/channelnotifier"
 	"github.com/lightningnetwork/lnd/discovery"
-	"github.com/lightningnetwork/lnd/htlcswitch"
 	"github.com/lightningnetwork/lnd/input"
 	"github.com/lightningnetwork/lnd/keychain"
 	"github.com/lightningnetwork/lnd/lncfg"
 	"github.com/lightningnetwork/lnd/lnpeer"
 	"github.com/lightningnetwork/lnd/lnrpc"
 	"github.com/lightningnetwork/lnd/lntest/mock"
+	"github.com/lightningnetwork/lnd/lntest/wait"
 	"github.com/lightningnetwork/lnd/lnwallet"
 	"github.com/lightningnetwork/lnd/lnwallet/chainfee"
 	"github.com/lightningnetwork/lnd/lnwire"
@@ -250,7 +252,6 @@ type testNode struct {
 	testDir         string
 	shutdownChannel chan struct{}
 	reportScidChan  chan struct{}
-	updatedPolicies chan map[wire.OutPoint]htlcswitch.ForwardingPolicy
 	localFeatures   []lnwire.FeatureBit
 	remoteFeatures  []lnwire.FeatureBit
 
@@ -379,9 +380,6 @@ func createTestFundingManager(t *testing.T, privKey *btcec.PrivateKey,
 	publTxChan := make(chan *wire.MsgTx, 1)
 	shutdownChan := make(chan struct{})
 	reportScidChan := make(chan struct{})
-	updatedPolicies := make(
-		chan map[wire.OutPoint]htlcswitch.ForwardingPolicy, 1,
-	)
 
 	wc := &mock.WalletController{
 		RootKey: alicePrivKey,
@@ -432,6 +430,7 @@ func createTestFundingManager(t *testing.T, privKey *btcec.PrivateKey,
 		IDKeyLoc:     testKeyLoc,
 		Wallet:       lnw,
 		Notifier:     chainNotifier,
+		ChannelDB:    cdb,
 		FeeEstimator: estimator,
 		SignMessage: func(_ keychain.KeyLocator,
 			_ []byte, _ bool) (*ecdsa.Signature, error) {
@@ -476,7 +475,7 @@ func createTestFundingManager(t *testing.T, privKey *btcec.PrivateKey,
 
 			return nil, fmt.Errorf("unable to find channel")
 		},
-		DefaultRoutingPolicy: htlcswitch.ForwardingPolicy{
+		DefaultRoutingPolicy: models.ForwardingPolicy{
 			MinHTLCOut:    5,
 			BaseFee:       100,
 			FeeRate:       1000,
@@ -538,11 +537,6 @@ func createTestFundingManager(t *testing.T, privKey *btcec.PrivateKey,
 			return nil, nil
 		},
 		AliasManager: aliasMgr,
-		UpdateForwardingPolicies: func(
-			p map[wire.OutPoint]htlcswitch.ForwardingPolicy) {
-
-			updatedPolicies <- p
-		},
 	}
 
 	for _, op := range options {
@@ -567,7 +561,6 @@ func createTestFundingManager(t *testing.T, privKey *btcec.PrivateKey,
 		testDir:         tempTestDir,
 		shutdownChannel: shutdownChan,
 		reportScidChan:  reportScidChan,
-		updatedPolicies: updatedPolicies,
 		addr:            addr,
 	}
 
@@ -601,6 +594,7 @@ func recreateAliceFundingManager(t *testing.T, alice *testNode) {
 		IDKeyLoc:     oldCfg.IDKeyLoc,
 		Wallet:       oldCfg.Wallet,
 		Notifier:     oldCfg.Notifier,
+		ChannelDB:    oldCfg.ChannelDB,
 		FeeEstimator: oldCfg.FeeEstimator,
 		SignMessage: func(_ keychain.KeyLocator,
 			_ []byte, _ bool) (*ecdsa.Signature, error) {
@@ -631,7 +625,7 @@ func recreateAliceFundingManager(t *testing.T, alice *testNode) {
 		},
 		TempChanIDSeed: oldCfg.TempChanIDSeed,
 		FindChannel:    oldCfg.FindChannel,
-		DefaultRoutingPolicy: htlcswitch.ForwardingPolicy{
+		DefaultRoutingPolicy: models.ForwardingPolicy{
 			MinHTLCOut:    5,
 			BaseFee:       100,
 			FeeRate:       1000,
@@ -647,12 +641,11 @@ func recreateAliceFundingManager(t *testing.T, alice *testNode) {
 		UpdateLabel: func(chainhash.Hash, string) error {
 			return nil
 		},
-		ZombieSweeperInterval:    oldCfg.ZombieSweeperInterval,
-		ReservationTimeout:       oldCfg.ReservationTimeout,
-		OpenChannelPredicate:     chainedAcceptor,
-		DeleteAliasEdge:          oldCfg.DeleteAliasEdge,
-		AliasManager:             oldCfg.AliasManager,
-		UpdateForwardingPolicies: oldCfg.UpdateForwardingPolicies,
+		ZombieSweeperInterval: oldCfg.ZombieSweeperInterval,
+		ReservationTimeout:    oldCfg.ReservationTimeout,
+		OpenChannelPredicate:  chainedAcceptor,
+		DeleteAliasEdge:       oldCfg.DeleteAliasEdge,
+		AliasManager:          oldCfg.AliasManager,
 	})
 	require.NoError(t, err, "failed recreating aliceFundingManager")
 
@@ -1141,21 +1134,6 @@ func assertChannelAnnouncements(t *testing.T, alice, bob *testNode,
 			}
 		}
 
-		// At this point we should also have gotten a policy update that
-		// was sent to the switch subsystem. Make sure it contains the
-		// same values.
-		var policyUpdate htlcswitch.ForwardingPolicy
-		select {
-		case policyUpdateMap := <-node.updatedPolicies:
-			require.Len(t, policyUpdateMap, 1)
-			for _, policy := range policyUpdateMap {
-				policyUpdate = policy
-			}
-
-		case <-time.After(time.Second * 5):
-			t.Fatalf("node didn't send policy update")
-		}
-
 		gotChannelAnnouncement := false
 		gotChannelUpdate := false
 		for _, msg := range announcements {
@@ -1184,34 +1162,24 @@ func assertChannelAnnouncements(t *testing.T, alice, bob *testNode,
 					minHtlc = customMinHtlc[j]
 				}
 				require.Equal(t, minHtlc, m.HtlcMinimumMsat)
-				require.Equal(
-					t, minHtlc, policyUpdate.MinHTLCOut,
-				)
 
 				// We might expect a custom MaxHltc value.
 				if len(customMaxHtlc) > 0 {
 					maxHtlc = customMaxHtlc[j]
 				}
 				require.Equal(t, maxHtlc, m.HtlcMaximumMsat)
-				require.Equal(t, maxHtlc, policyUpdate.MaxHTLC)
 
 				// We might expect a custom baseFee value.
 				if len(baseFees) > 0 {
 					baseFee = baseFees[j]
 				}
 				require.EqualValues(t, baseFee, m.BaseFee)
-				require.EqualValues(
-					t, baseFee, policyUpdate.BaseFee,
-				)
 
 				// We might expect a custom feeRate value.
 				if len(feeRates) > 0 {
 					feeRate = feeRates[j]
 				}
 				require.EqualValues(t, feeRate, m.FeeRate)
-				require.EqualValues(
-					t, feeRate, policyUpdate.FeeRate,
-				)
 
 				gotChannelUpdate = true
 			}
@@ -1299,13 +1267,12 @@ func assertNoChannelState(t *testing.T, alice, bob *testNode,
 }
 
 func assertNoFwdingPolicy(t *testing.T, alice, bob *testNode,
-	fundingOutPoint *wire.OutPoint) {
+	chanID lnwire.ChannelID) {
 
 	t.Helper()
 
-	chandID := lnwire.NewChanIDFromOutPoint(fundingOutPoint)
-	assertInitialFwdingPolicyNotFound(t, alice, &chandID)
-	assertInitialFwdingPolicyNotFound(t, bob, &chandID)
+	assertInitialFwdingPolicyNotFound(t, alice, &chanID)
+	assertInitialFwdingPolicyNotFound(t, bob, &chanID)
 }
 
 func assertErrChannelNotFound(t *testing.T, node *testNode,
@@ -1338,42 +1305,46 @@ func assertInitialFwdingPolicyNotFound(t *testing.T, node *testNode,
 
 	t.Helper()
 
-	var fwdingPolicy *htlcswitch.ForwardingPolicy
-	var err error
-	for i := 0; i < testPollNumTries; i++ {
-		// If this is not the first try, sleep before retrying.
-		if i > 0 {
-			time.Sleep(testPollSleepMs * time.Millisecond)
+	err := wait.NoError(func() error {
+		_, err := node.fundingMgr.getInitialForwardingPolicy(*chanID)
+		if errors.Is(err, channeldb.ErrChannelNotFound) {
+			return nil
 		}
-		fwdingPolicy, err = node.fundingMgr.getInitialFwdingPolicy(
-			*chanID,
-		)
-		require.ErrorIs(t, err, channeldb.ErrChannelNotFound)
 
-		// Got expected result, return with success.
-		return
-	}
+		return fmt.Errorf("expected ErrChannelNotFound, got %w", err)
+	}, wait.DefaultTimeout)
 
-	// 10 tries without success.
-	t.Fatalf("expected to not find a forwarding policy, found policy %v",
-		fwdingPolicy)
+	require.NoError(t, err)
 }
 
-func assertHandleChannelReady(t *testing.T, alice, bob *testNode) {
+func assertHandleChannelReady(t *testing.T, alice, bob *testNode,
+	checkChannel ...func(node *testNode, msg *newChannelMsg) bool) {
+
 	t.Helper()
 
+	const timeout = time.Second * 15
 	// They should both send the new channel state to their peer.
 	select {
 	case c := <-alice.newChannels:
+		for _, check := range checkChannel {
+			require.NoError(t, wait.Predicate(func() bool {
+				return check(alice, c)
+			}, timeout))
+		}
 		close(c.err)
-	case <-time.After(time.Second * 15):
+	case <-time.After(timeout):
 		t.Fatalf("alice did not send new channel to peer")
 	}
 
 	select {
 	case c := <-bob.newChannels:
+		for _, check := range checkChannel {
+			require.NoError(t, wait.Predicate(func() bool {
+				return check(bob, c)
+			}, timeout))
+		}
 		close(c.err)
-	case <-time.After(time.Second * 15):
+	case <-time.After(timeout):
 		t.Fatalf("bob did not send new channel to peer")
 	}
 }
@@ -1469,7 +1440,7 @@ func TestFundingManagerNormalWorkflow(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database, as the channel is announced.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerRejectCSV tests checking of local CSV values against our
@@ -1782,7 +1753,7 @@ func TestFundingManagerRestartBehavior(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database, as the channel is announced.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerOfflinePeer checks that the fundingManager waits for the
@@ -1945,7 +1916,7 @@ func TestFundingManagerOfflinePeer(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database, as the channel is announced.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerPeerTimeoutAfterInitFunding checks that the zombie sweeper
@@ -2403,7 +2374,7 @@ func TestFundingManagerReceiveChannelReadyTwice(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database, as the channel is announced.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerRestartAfterChanAnn checks that the fundingManager properly
@@ -2502,7 +2473,7 @@ func TestFundingManagerRestartAfterChanAnn(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database, as the channel is announced.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerRestartAfterReceivingChannelReady checks that the
@@ -2597,7 +2568,7 @@ func TestFundingManagerRestartAfterReceivingChannelReady(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database, as the channel is announced.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerPrivateChannel tests that if we open a private channel
@@ -2721,7 +2692,7 @@ func TestFundingManagerPrivateChannel(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerPrivateRestart tests that the privacy guarantees granted
@@ -2870,7 +2841,7 @@ func TestFundingManagerPrivateRestart(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database.
-	assertNoFwdingPolicy(t, alice, bob, fundingOutPoint)
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerCustomChannelParameters checks that custom requirements we
@@ -2890,12 +2861,12 @@ func TestFundingManagerCustomChannelParameters(t *testing.T) {
 	const fundingAmt = 5000000
 	const chanReserve = 100000
 
-	// Use custom channel fees.
-	// These will show up in the channel reservation context
-	var baseFee uint64
-	var feeRate uint64
-	baseFee = 42
-	feeRate = 1337
+	// Use custom channel fees. These will show up in the channel
+	// reservation context.
+	var (
+		baseFee uint64 = 42
+		feeRate uint64 = 1337
+	)
 
 	// We will consume the channel updates as we go, so no buffering is
 	// needed.
@@ -3074,7 +3045,7 @@ func TestFundingManagerCustomChannelParameters(t *testing.T) {
 
 	// Helper method for checking baseFee and feeRate stored for a
 	// reservation.
-	assertFees := func(forwardingPolicy *htlcswitch.ForwardingPolicy,
+	assertFees := func(forwardingPolicy *models.ForwardingPolicy,
 		baseFee, feeRate lnwire.MilliSatoshi) error {
 
 		if forwardingPolicy.BaseFee != baseFee {
@@ -3171,13 +3142,13 @@ func TestFundingManagerCustomChannelParameters(t *testing.T) {
 	// After the funding is signed and before the channel announcement
 	// we expect Alice and Bob to store their respective fees in the
 	// database.
-	forwardingPolicy, err := alice.fundingMgr.getInitialFwdingPolicy(
+	forwardingPolicy, err := alice.fundingMgr.getInitialForwardingPolicy(
 		fundingSigned.ChanID,
 	)
 	require.NoError(t, err)
 	require.NoError(t, assertFees(forwardingPolicy, 42, 1337))
 
-	forwardingPolicy, err = bob.fundingMgr.getInitialFwdingPolicy(
+	forwardingPolicy, err = bob.fundingMgr.getInitialForwardingPolicy(
 		fundingSigned.ChanID,
 	)
 	require.NoError(t, err)
@@ -3216,10 +3187,6 @@ func TestFundingManagerCustomChannelParameters(t *testing.T) {
 	alice.fundingMgr.ProcessFundingMsg(channelReadyBob, bob)
 	bob.fundingMgr.ProcessFundingMsg(channelReadyAlice, alice)
 
-	// Check that they notify the breach arbiter and peer about the new
-	// channel.
-	assertHandleChannelReady(t, alice, bob)
-
 	// Make sure both fundingManagers send the expected channel
 	// announcements.
 	// Alice should advertise the default MinHTLC value of
@@ -3236,15 +3203,45 @@ func TestFundingManagerCustomChannelParameters(t *testing.T) {
 
 	// Alice should have custom fees set whereas Bob should see his
 	// configured default fees announced.
+	defaultDelta := bob.fundingMgr.cfg.DefaultRoutingPolicy.TimeLockDelta
 	defaultBaseFee := bob.fundingMgr.cfg.DefaultRoutingPolicy.BaseFee
-	defaultFeerate := bob.fundingMgr.cfg.DefaultRoutingPolicy.FeeRate
+	defaultFeeRate := bob.fundingMgr.cfg.DefaultRoutingPolicy.FeeRate
 	baseFees := []lnwire.MilliSatoshi{
 		lnwire.MilliSatoshi(baseFee), defaultBaseFee,
 	}
 	feeRates := []lnwire.MilliSatoshi{
-		lnwire.MilliSatoshi(feeRate), defaultFeerate,
+		lnwire.MilliSatoshi(feeRate), defaultFeeRate,
 	}
 
+	// Check that they notify the breach arbiter and peer about the new
+	// channel.
+	assertHandleChannelReady(
+		t, alice, bob, func(node *testNode, msg *newChannelMsg) bool {
+			aliceDB := alice.fundingMgr.cfg.ChannelDB
+			chanID := lnwire.NewChanIDFromOutPoint(
+				&msg.channel.FundingOutpoint,
+			)
+
+			if node == alice {
+				p, err := aliceDB.GetInitialForwardingPolicy(
+					chanID,
+				)
+				require.NoError(t, err)
+
+				return reflect.DeepEqual(
+					p, &models.ForwardingPolicy{
+						MaxHTLC:       maxHtlcArr[0],
+						MinHTLCOut:    minHtlcArr[0],
+						BaseFee:       baseFees[0],
+						FeeRate:       feeRates[0],
+						TimeLockDelta: defaultDelta,
+					},
+				)
+			}
+
+			return true
+		},
+	)
 	assertChannelAnnouncements(
 		t, alice, bob, capacity, minHtlcArr, maxHtlcArr, baseFees,
 		feeRates,
@@ -3267,18 +3264,7 @@ func TestFundingManagerCustomChannelParameters(t *testing.T) {
 
 	// After the announcement we expect Alice and Bob to have cleared
 	// the fees for the channel from the database.
-	_, err = alice.fundingMgr.getInitialFwdingPolicy(fundingSigned.ChanID)
-	if err != channeldb.ErrChannelNotFound {
-		err = fmt.Errorf("channel fees were expected to be deleted" +
-			" but were not")
-		t.Fatal(err)
-	}
-	_, err = bob.fundingMgr.getInitialFwdingPolicy(fundingSigned.ChanID)
-	if err != channeldb.ErrChannelNotFound {
-		err = fmt.Errorf("channel fees were expected to be deleted" +
-			" but were not")
-		t.Fatal(err)
-	}
+	assertNoFwdingPolicy(t, alice, bob, channelReadyAlice.ChanID)
 }
 
 // TestFundingManagerInvalidChanReserve ensures proper validation is done on
@@ -4473,7 +4459,7 @@ func TestFundingManagerZeroConf(t *testing.T) {
 
 	// The forwarding policy for the channel announcement should
 	// have been deleted from the database, as the channel is announced.
-	assertNoFwdingPolicy(t, alice, bob, fundingOp)
+	assertNoFwdingPolicy(t, alice, bob, aliceChannelReady.ChanID)
 }
 
 // TestCommitmentTypeFundmaxSanityCheck was introduced as a way of reminding
diff --git a/htlcswitch/interfaces.go b/htlcswitch/interfaces.go
index 8f418edfe..304f4a595 100644
--- a/htlcswitch/interfaces.go
+++ b/htlcswitch/interfaces.go
@@ -191,7 +191,7 @@ type ChannelLink interface {
 	// UpdateForwardingPolicy updates the forwarding policy for the target
 	// ChannelLink. Once updated, the link will use the new forwarding
 	// policy to govern if it an incoming HTLC should be forwarded or not.
-	UpdateForwardingPolicy(ForwardingPolicy)
+	UpdateForwardingPolicy(models.ForwardingPolicy)
 
 	// CheckHtlcForward should return a nil error if the passed HTLC details
 	// satisfy the current forwarding policy fo the target link. Otherwise,
diff --git a/htlcswitch/link.go b/htlcswitch/link.go
index 4fbe90554..d025cdfff 100644
--- a/htlcswitch/link.go
+++ b/htlcswitch/link.go
@@ -64,44 +64,6 @@ const (
 	DefaultMaxLinkFeeAllocation float64 = 0.5
 )
 
-// ForwardingPolicy describes the set of constraints that a given ChannelLink
-// is to adhere to when forwarding HTLC's. For each incoming HTLC, this set of
-// constraints will be consulted in order to ensure that adequate fees are
-// paid, and our time-lock parameters are respected. In the event that an
-// incoming HTLC violates any of these constraints, it is to be _rejected_ with
-// the error possibly carrying along a ChannelUpdate message that includes the
-// latest policy.
-type ForwardingPolicy struct {
-	// MinHTLC is the smallest HTLC that is to be forwarded.
-	MinHTLCOut lnwire.MilliSatoshi
-
-	// MaxHTLC is the largest HTLC that is to be forwarded.
-	MaxHTLC lnwire.MilliSatoshi
-
-	// BaseFee is the base fee, expressed in milli-satoshi that must be
-	// paid for each incoming HTLC. This field, combined with FeeRate is
-	// used to compute the required fee for a given HTLC.
-	BaseFee lnwire.MilliSatoshi
-
-	// FeeRate is the fee rate, expressed in milli-satoshi that must be
-	// paid for each incoming HTLC. This field combined with BaseFee is
-	// used to compute the required fee for a given HTLC.
-	FeeRate lnwire.MilliSatoshi
-
-	// TimeLockDelta is the absolute time-lock value, expressed in blocks,
-	// that will be subtracted from an incoming HTLC's timelock value to
-	// create the time-lock value for the forwarded outgoing HTLC. The
-	// following constraint MUST hold for an HTLC to be forwarded:
-	//
-	//  * incomingHtlc.timeLock - timeLockDelta = fwdInfo.OutgoingCTLV
-	//
-	//    where fwdInfo is the forwarding information extracted from the
-	//    per-hop payload of the incoming HTLC's onion packet.
-	TimeLockDelta uint32
-
-	// TODO(roasbeef): add fee module inside of switch
-}
-
 // ExpectedFee computes the expected fee for a given htlc amount. The value
 // returned from this function is to be used as a sanity check when forwarding
 // HTLC's to ensure that an incoming HTLC properly adheres to our propagated
@@ -109,7 +71,7 @@ type ForwardingPolicy struct {
 //
 // TODO(roasbeef): also add in current available channel bandwidth, inverse
 // func
-func ExpectedFee(f ForwardingPolicy,
+func ExpectedFee(f models.ForwardingPolicy,
 	htlcAmt lnwire.MilliSatoshi) lnwire.MilliSatoshi {
 
 	return f.BaseFee + (htlcAmt*f.FeeRate)/1000000
@@ -123,7 +85,7 @@ type ChannelLinkConfig struct {
 	// deciding whether to forwarding incoming HTLC's or not. This value
 	// can be updated with subsequent calls to UpdateForwardingPolicy
 	// targeted at a given ChannelLink concrete interface implementation.
-	FwrdingPolicy ForwardingPolicy
+	FwrdingPolicy models.ForwardingPolicy
 
 	// Circuits provides restricted access to the switch's circuit map,
 	// allowing the link to open and close circuits.
@@ -2522,7 +2484,9 @@ func (l *channelLink) AttachMailBox(mailbox MailBox) {
 // update all of the link's FwrdingPolicy's values.
 //
 // NOTE: Part of the ChannelLink interface.
-func (l *channelLink) UpdateForwardingPolicy(newPolicy ForwardingPolicy) {
+func (l *channelLink) UpdateForwardingPolicy(
+	newPolicy models.ForwardingPolicy) {
+
 	l.Lock()
 	defer l.Unlock()
 
@@ -2627,7 +2591,7 @@ func (l *channelLink) CheckHtlcTransit(payHash [32]byte,
 
 // canSendHtlc checks whether the given htlc parameters satisfy
 // the channel's amount and time lock constraints.
-func (l *channelLink) canSendHtlc(policy ForwardingPolicy,
+func (l *channelLink) canSendHtlc(policy models.ForwardingPolicy,
 	payHash [32]byte, amt lnwire.MilliSatoshi, timeout uint32,
 	heightNow uint32, originalScid lnwire.ShortChannelID) *LinkError {
 
diff --git a/htlcswitch/link_test.go b/htlcswitch/link_test.go
index 35eb6a9ea..21b11c57d 100644
--- a/htlcswitch/link_test.go
+++ b/htlcswitch/link_test.go
@@ -23,6 +23,7 @@ import (
 	sphinx "github.com/lightningnetwork/lightning-onion"
 	"github.com/lightningnetwork/lnd/build"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/contractcourt"
 	"github.com/lightningnetwork/lnd/htlcswitch/hodl"
 	"github.com/lightningnetwork/lnd/htlcswitch/hop"
@@ -1925,7 +1926,7 @@ func newSingleLinkTestHarness(t *testing.T, chanAmt, chanReserve btcutil.Amount)
 			sentMsgs: make(chan lnwire.Message, 2000),
 			quit:     make(chan struct{}),
 		}
-		globalPolicy = ForwardingPolicy{
+		globalPolicy = models.ForwardingPolicy{
 			MinHTLCOut:    lnwire.NewMSatFromSatoshis(5),
 			MaxHTLC:       lnwire.NewMSatFromSatoshis(chanAmt),
 			BaseFee:       lnwire.NewMSatFromSatoshis(1),
@@ -4374,7 +4375,7 @@ func (h *persistentLinkHarness) restartLink(
 			quit:     make(chan struct{}),
 		}
 
-		globalPolicy = ForwardingPolicy{
+		globalPolicy = models.ForwardingPolicy{
 			MinHTLCOut:    lnwire.NewMSatFromSatoshis(5),
 			BaseFee:       lnwire.NewMSatFromSatoshis(1),
 			TimeLockDelta: 6,
@@ -5630,7 +5631,7 @@ func TestExpectedFee(t *testing.T) {
 	}
 
 	for _, test := range testCases {
-		f := ForwardingPolicy{
+		f := models.ForwardingPolicy{
 			BaseFee: test.baseFee,
 			FeeRate: test.feeRate,
 		}
@@ -5716,7 +5717,7 @@ func TestCheckHtlcForward(t *testing.T) {
 
 	link := channelLink{
 		cfg: ChannelLinkConfig{
-			FwrdingPolicy: ForwardingPolicy{
+			FwrdingPolicy: models.ForwardingPolicy{
 				TimeLockDelta: 20,
 				MinHTLCOut:    500,
 				MaxHTLC:       1000,
diff --git a/htlcswitch/mock.go b/htlcswitch/mock.go
index a17045b1e..ea76549b4 100644
--- a/htlcswitch/mock.go
+++ b/htlcswitch/mock.go
@@ -840,7 +840,7 @@ func (f *mockChannelLink) getDustClosure() dustClosure {
 func (f *mockChannelLink) HandleChannelUpdate(lnwire.Message) {
 }
 
-func (f *mockChannelLink) UpdateForwardingPolicy(_ ForwardingPolicy) {
+func (f *mockChannelLink) UpdateForwardingPolicy(_ models.ForwardingPolicy) {
 }
 func (f *mockChannelLink) CheckHtlcForward([32]byte, lnwire.MilliSatoshi,
 	lnwire.MilliSatoshi, uint32, uint32, uint32,
diff --git a/htlcswitch/switch.go b/htlcswitch/switch.go
index 6f632be35..2d20db800 100644
--- a/htlcswitch/switch.go
+++ b/htlcswitch/switch.go
@@ -611,7 +611,7 @@ func (s *Switch) SendHTLC(firstHop lnwire.ShortChannelID, attemptID uint64,
 // forwarding policies for all links have been updated, or the switch shuts
 // down.
 func (s *Switch) UpdateForwardingPolicies(
-	chanPolicies map[wire.OutPoint]ForwardingPolicy) {
+	chanPolicies map[wire.OutPoint]models.ForwardingPolicy) {
 
 	log.Tracef("Updating link policies: %v", newLogClosure(func() string {
 		return spew.Sdump(chanPolicies)
diff --git a/htlcswitch/test_utils.go b/htlcswitch/test_utils.go
index c1bfb1f55..b03aff417 100644
--- a/htlcswitch/test_utils.go
+++ b/htlcswitch/test_utils.go
@@ -23,6 +23,7 @@ import (
 	"github.com/go-errors/errors"
 	sphinx "github.com/lightningnetwork/lightning-onion"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/contractcourt"
 	"github.com/lightningnetwork/lnd/htlcswitch/hop"
 	"github.com/lightningnetwork/lnd/input"
@@ -1069,7 +1070,7 @@ func createTwoClusterChannels(t *testing.T, aliceToBob,
 // hopNetwork is the base struct for two and three hop networks
 type hopNetwork struct {
 	feeEstimator *mockFeeEstimator
-	globalPolicy ForwardingPolicy
+	globalPolicy models.ForwardingPolicy
 	obfuscator   hop.ErrorEncrypter
 
 	defaultDelta uint32
@@ -1078,7 +1079,7 @@ type hopNetwork struct {
 func newHopNetwork() *hopNetwork {
 	defaultDelta := uint32(6)
 
-	globalPolicy := ForwardingPolicy{
+	globalPolicy := models.ForwardingPolicy{
 		MinHTLCOut:    lnwire.NewMSatFromSatoshis(5),
 		BaseFee:       lnwire.NewMSatFromSatoshis(1),
 		TimeLockDelta: defaultDelta,
diff --git a/peer/brontide.go b/peer/brontide.go
index 43d4e57f3..a58a44292 100644
--- a/peer/brontide.go
+++ b/peer/brontide.go
@@ -21,6 +21,7 @@ import (
 	"github.com/lightningnetwork/lnd/build"
 	"github.com/lightningnetwork/lnd/chainntnfs"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/channelnotifier"
 	"github.com/lightningnetwork/lnd/contractcourt"
 	"github.com/lightningnetwork/lnd/discovery"
@@ -234,7 +235,7 @@ type Config struct {
 
 	// RoutingPolicy is used to set the forwarding policy for links created by
 	// the Brontide.
-	RoutingPolicy htlcswitch.ForwardingPolicy
+	RoutingPolicy models.ForwardingPolicy
 
 	// Sphinx is used when setting up ChannelLinks so they can decode sphinx
 	// onion blobs.
@@ -877,9 +878,9 @@ func (p *Brontide) loadActiveChannels(chans []*channeldb.OpenChannel) (
 		// If we don't yet have an advertised routing policy, then
 		// we'll use the current default, otherwise we'll translate the
 		// routing policy into a forwarding policy.
-		var forwardingPolicy *htlcswitch.ForwardingPolicy
+		var forwardingPolicy *models.ForwardingPolicy
 		if selfPolicy != nil {
-			forwardingPolicy = &htlcswitch.ForwardingPolicy{
+			forwardingPolicy = &models.ForwardingPolicy{
 				MinHTLCOut:    selfPolicy.MinHTLC,
 				MaxHTLC:       selfPolicy.MaxHTLC,
 				BaseFee:       selfPolicy.FeeBaseMSat,
@@ -934,7 +935,7 @@ func (p *Brontide) loadActiveChannels(chans []*channeldb.OpenChannel) (
 // addLink creates and adds a new ChannelLink from the specified channel.
 func (p *Brontide) addLink(chanPoint *wire.OutPoint,
 	lnChan *lnwallet.LightningChannel,
-	forwardingPolicy *htlcswitch.ForwardingPolicy,
+	forwardingPolicy *models.ForwardingPolicy,
 	chainEvents *contractcourt.ChainEventSubscription,
 	syncStates bool) error {
 
@@ -3831,26 +3832,18 @@ func (p *Brontide) addActiveChannel(c *channeldb.OpenChannel) error {
 			err)
 	}
 
-	// We'll query the localChanCfg of the new channel to determine the
-	// minimum HTLC value that can be forwarded. For the maximum HTLC value
-	// that can be forwarded and fees we'll use the default values, as they
-	// currently are always set to the default values at initial channel
-	// creation. Note that the maximum HTLC value defaults to the cap on
-	// the total value of outstanding HTLCs.
-	fwdMinHtlc := lnChan.FwdMinHtlc()
-	defaultPolicy := p.cfg.RoutingPolicy
-	forwardingPolicy := &htlcswitch.ForwardingPolicy{
-		MinHTLCOut:    fwdMinHtlc,
-		MaxHTLC:       c.LocalChanCfg.MaxPendingAmount,
-		BaseFee:       defaultPolicy.BaseFee,
-		FeeRate:       defaultPolicy.FeeRate,
-		TimeLockDelta: defaultPolicy.TimeLockDelta,
+	// We'll query the channel DB for the new channel's initial forwarding
+	// policies to determine the policy we start out with.
+	initialPolicy, err := p.cfg.ChannelDB.GetInitialForwardingPolicy(chanID)
+	if err != nil {
+		return fmt.Errorf("unable to query for initial forwarding "+
+			"policy: %v", err)
 	}
 
 	// Create the link and add it to the switch.
 	err = p.addLink(
-		chanPoint, lnChan, forwardingPolicy,
-		chainEvents, shouldReestablish,
+		chanPoint, lnChan, initialPolicy, chainEvents,
+		shouldReestablish,
 	)
 	if err != nil {
 		return fmt.Errorf("can't register new channel link(%v) with "+
diff --git a/routing/localchans/manager.go b/routing/localchans/manager.go
index 2155e6285..3a4e2416a 100644
--- a/routing/localchans/manager.go
+++ b/routing/localchans/manager.go
@@ -7,8 +7,8 @@ import (
 
 	"github.com/btcsuite/btcd/wire"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/discovery"
-	"github.com/lightningnetwork/lnd/htlcswitch"
 	"github.com/lightningnetwork/lnd/kvdb"
 	"github.com/lightningnetwork/lnd/lnrpc"
 	"github.com/lightningnetwork/lnd/lnwire"
@@ -21,7 +21,7 @@ type Manager struct {
 	// UpdateForwardingPolicies is used by the manager to update active
 	// links with a new policy.
 	UpdateForwardingPolicies func(
-		chanPolicies map[wire.OutPoint]htlcswitch.ForwardingPolicy)
+		chanPolicies map[wire.OutPoint]models.ForwardingPolicy)
 
 	// PropagateChanPolicyUpdate is called to persist a new policy to disk
 	// and broadcast it to the network.
@@ -66,7 +66,7 @@ func (r *Manager) UpdatePolicy(newSchema routing.ChannelPolicy,
 
 	var failedUpdates []*lnrpc.FailedUpdate
 	var edgesToUpdate []discovery.EdgeWithInfo
-	policiesToUpdate := make(map[wire.OutPoint]htlcswitch.ForwardingPolicy)
+	policiesToUpdate := make(map[wire.OutPoint]models.ForwardingPolicy)
 
 	// Next, we'll loop over all the outgoing channels the router knows of.
 	// If we have a filter then we'll only collected those channels,
@@ -106,7 +106,7 @@ func (r *Manager) UpdatePolicy(newSchema routing.ChannelPolicy,
 		})
 
 		// Add updated policy to list of policies to send to switch.
-		policiesToUpdate[info.ChannelPoint] = htlcswitch.ForwardingPolicy{
+		policiesToUpdate[info.ChannelPoint] = models.ForwardingPolicy{
 			BaseFee:       edge.FeeBaseMSat,
 			FeeRate:       edge.FeeProportionalMillionths,
 			TimeLockDelta: uint32(edge.TimeLockDelta),
diff --git a/routing/localchans/manager_test.go b/routing/localchans/manager_test.go
index 94f4255ce..b14093a01 100644
--- a/routing/localchans/manager_test.go
+++ b/routing/localchans/manager_test.go
@@ -7,8 +7,8 @@ import (
 	"github.com/btcsuite/btcd/chaincfg/chainhash"
 	"github.com/btcsuite/btcd/wire"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/channeldb/models"
 	"github.com/lightningnetwork/lnd/discovery"
-	"github.com/lightningnetwork/lnd/htlcswitch"
 	"github.com/lightningnetwork/lnd/kvdb"
 	"github.com/lightningnetwork/lnd/lnrpc"
 	"github.com/lightningnetwork/lnd/lnwire"
@@ -50,7 +50,7 @@ func TestManager(t *testing.T) {
 	}
 
 	updateForwardingPolicies := func(
-		chanPolicies map[wire.OutPoint]htlcswitch.ForwardingPolicy) {
+		chanPolicies map[wire.OutPoint]models.ForwardingPolicy) {
 
 		if len(chanPolicies) == 0 {
 			return
diff --git a/server.go b/server.go
index e3fc80113..206ab43f1 100644
--- a/server.go
+++ b/server.go
@@ -1297,6 +1297,7 @@ func newServer(cfg *Config, listenAddrs []net.Addr,
 			return cc.Wallet.LabelTransaction(hash, label, true)
 		},
 		Notifier:     cc.ChainNotifier,
+		ChannelDB:    s.chanStateDB,
 		FeeEstimator: cc.FeeEstimator,
 		SignMessage:  cc.MsgSigner.SignMessage,
 		CurrentNodeAnnouncement: func() (lnwire.NodeAnnouncement,
@@ -1458,9 +1459,8 @@ func newServer(cfg *Config, listenAddrs []net.Addr,
 		RegisteredChains:              cfg.registeredChains,
 		MaxAnchorsCommitFeeRate: chainfee.SatPerKVByte(
 			s.cfg.MaxCommitFeeRateAnchors * 1000).FeePerKWeight(),
-		DeleteAliasEdge:          deleteAliasEdge,
-		AliasManager:             s.aliasMgr,
-		UpdateForwardingPolicies: s.htlcSwitch.UpdateForwardingPolicies,
+		DeleteAliasEdge: deleteAliasEdge,
+		AliasManager:    s.aliasMgr,
 	})
 	if err != nil {
 		return nil, err