How much costs the late payment interest rate?


The late payment interest rate for regular mortgages with monthly or annual compounding does not hurt much. However, with a simple interest mortgage (SIM) even 5-6 days can lead to a significant late payment interest charge. The SIM interest is calculated for each day of the loan.

For example, if you have a simple interest mortgage of $150,000 at 6.50%, multiply the loan amount to the interest rate and divide it by 365 and you will get $26.71 simple daily interest. And since there is no grace period with SIMs, your late payment comes very costly to you. Not only will you owe late payment charges, but if you are late 7 days, you will have to pay $187 in interest. Unlike normal mortgage late interest charges, amounting to unsubstantial interest, SIM late payments can lead to negative amortization of the loan.

Also, to avoid incurring late payment charges and additional interest rate on payments, make sure you post them on time so that the lender doesn't get them late.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.8/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: