Posted on: 08th Apr, 2004 11:53 pm
Late Charge is the penalty that lenders charge from borrowers on account of making their mortgage payments after the due date. In most cases, lenders offer a grace period of 10 to 20 days after which they demand late charges.
For example, John has taken a mortgage loan from Daniel. The due date for the monthly payment is on the 15th of every month. But this month, he hasn't been able to make the payments on the 15th; instead, he pays the monthly installment on the 25th. So, Daniel charged him an extra $1000 as penalty for not paying on the due date. This extra amount of cash is known as the late charge.
Your payment is considered to be late when you pay at least 15 days after the due date. Such late payments are not reported to the credit reporting agencies. But if you are 30 days late on your payments, then you are considered to be delinquent and this will be reported to the credit reporting agencies.
The more accounts that show a history of late payments and charges, and the longer a debt remains unpaid, the more negative impact this will have on your credit report. For instance, if you have paid late charges for accounts that are 120 days past due then it will be far more damaging than that for one account that is 30 days past due.
Late payments and charges can damage your credit score and hence your credit rating. These charges are calculated on per day, per item basis. Usually, the late charges are calculated as a percentage of the payment amount or a minimum dollar amount such as 5% of the late payment.
For example, John has taken a mortgage loan from Daniel. The due date for the monthly payment is on the 15th of every month. But this month, he hasn't been able to make the payments on the 15th; instead, he pays the monthly installment on the 25th. So, Daniel charged him an extra $1000 as penalty for not paying on the due date. This extra amount of cash is known as the late charge.
Your payment is considered to be late when you pay at least 15 days after the due date. Such late payments are not reported to the credit reporting agencies. But if you are 30 days late on your payments, then you are considered to be delinquent and this will be reported to the credit reporting agencies.
The more accounts that show a history of late payments and charges, and the longer a debt remains unpaid, the more negative impact this will have on your credit report. For instance, if you have paid late charges for accounts that are 120 days past due then it will be far more damaging than that for one account that is 30 days past due.
Late payments and charges can damage your credit score and hence your credit rating. These charges are calculated on per day, per item basis. Usually, the late charges are calculated as a percentage of the payment amount or a minimum dollar amount such as 5% of the late payment.
My payment is due on the 1st of the month. I have 15 day grace period. When should the late charge assess? The night of the 15th or the night of the 15th? How about when the 16th is on Sunday and Monday is a holiday. Should the late charge be assessed on the 17th?
Hey Susanne,
A mortgage will be considered late after the grace period is over. However, you should note that lenders do not generally report a 15 day late or 30 day late payments to the credit bureaus but if you are 90 days late on your mortgage payments, it is reported to the credit bureau.
A mortgage will be considered late after the grace period is over. However, you should note that lenders do not generally report a 15 day late or 30 day late payments to the credit bureaus but if you are 90 days late on your mortgage payments, it is reported to the credit bureau.
Is a mortgage payment late if the bank is closed on Sunday and Monday is a hoiday?
Hi isa,
I don't think it will be considered as a late. Moreover, there is an extended time period of around 7-15 days for loan payments. If you pay off the dues within that time period, the lender will not consider this as your late payment.
Thanks,
Jerry
I don't think it will be considered as a late. Moreover, there is an extended time period of around 7-15 days for loan payments. If you pay off the dues within that time period, the lender will not consider this as your late payment.
Thanks,
Jerry