Question:

What happens after the mortgage payment grace period?

Answer:

Generally, the mortgage payment grace period is 15-days long. Many mortgage monthly payments are due on the 1st of the month and have a grace period through the 16th. If your payments arrive within this time interval, no late fees are charged and your credit history will not suffer.

After the Mortgage Payment Grace Period

If your payment arrives on the 17th and later, late charges will be incurred. This is certainly a waste of money. What is worse is that if your monthly mortgage payments are more than 30-days late, your credit report will reflect that beside the late penalty fees the borrower will have to pay.

The mortgage grace period is convenient for borrowers who have regular mortgages. For those having SIMs - simple interest mortgages - the mortgage payment grace period is not a convenience but can be a burden. For those who are not aware how SIMs work - interest is accrued daily and being 5 days late will add 5 days of interest to the regular mortgage payment. If daily accrued interest is $30, you will need to pay $150 on top of your monthly payment.

If you are making the mortgage payment after the grace period, you are paying through the nose, plus late fees will be incurred. Simple interest mortgages are quite dangerous for undisciplined borrowers.

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