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Mortgage Arrears Default Interest rate

Default interest rates come into play when you have missed payments and is declared as a mortgage in default. Here are the key points you need to know:

  1. Charged When in Default: All lenders impose a default interest rate when your home loan is in default. This rate is typically higher than (or additional to) your regular interest rate.
  2. Loan Contract Details: Your loan contract specifies the exact amount you’ll be charged for default interest. Indeed, keep an eye on this information—it’s crucial.
  3. Additional Mortgage Arrears Rate: In addition to your regular interest rate, there’s an extra mortgage arrears rate, usually ranging between 3% to 5%. As such, this additional rate is applied on top of your normal interest.
  4. Varied Approaches by Lenders:
    • Some lenders apply the default rate only to the arrears amount.
    • Others calculate the default rate based on the entire loan amount owed.
  5. Timely Payments Matter: To avoid default interest, ensure you make payments on time. Indeed, consistent, punctual payments are essential.
  6. Example Scenario:
    • Let’s say your regular interest rate is 4%.
    • If you fall into default, you might face an addiitonal 5% which totals a 9% default interest rate.

Remember, understanding your loan terms and staying informed about your obligations is crucial for managing your mortgage effectively.

Do you need help with mortgage arrears? Contact Loan Saver Network on 1300 796 850 or Apply for a Loan.