For most lenders, borrowers that do not process a repayment on or by the repayment date face late fees. In some cases, lenders may have a grace period or flexible repayment options that allow a borrower to set up a later repayment date without penalty, given the borrower has reached out to the lender beforehand and discussed the situation with them. However, all lenders, such as mortgage broker , will outline repayment expectations in a penalty clause within the settlement paperwork. Information on grace periods and flexible repayment options can also be found in loan documents. Otherwise, borrowers should contact their specialist mortgagee as soon as they know their repayment will not be submitted on time or for the borrower to inquire about their grace period or flexible repayment options.
Repayment notices. Lenders may mail out statements containing information, such as principal and interest costs, with a repayment date a couple of weeks in advance to the borrower. Lenders may also send frequent repayment reminders if the borrower consents to text or email alerts. The lender will also mail a notice on the first day that the borrower is overdue on their repayment.
Overseas payments. Although lenders may send out notices of the repayment date as scheduled, it may not come in time for expatriates (i.e., expats; foreign investors). It is strongly recommended that expats set recurring repayments up with their banking institution to ensure that repayments are made well before the repayment date. Not only are international payments strictly regulated and monitored, but the exchange rate fluctuates, so expats should be aware that their repayments could be delayed or may not amount to the same each month. In expatriates’ best interest, their financial institution should be within the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network to securely send repayments abroad with ease.
Failure to make repayments. A delay in repayment will accumulate more interest and negatively affect a borrower’s credit score. Additionally, depending on the loan terms, one late or missed repayment may put the borrower in loan default. Moreover, a letter of demand will eventually be sent to the borrower from the lender with the timeframe and consequences of failure to make a repayment, including penalties and potential legal fees. Suppose the lender chooses to place the borrower in default. In that case, the lender can repossess the property after evicting the borrower through the court system or seize the borrower’s assets to cover some or all the outstanding loan amount.