Delays in paying off monthly mortgage installments can be expensive. Not only that, in total, we will pay extra money to the loan annually, but we are also lowering our credit standing for the future.
Repayment of the loan installment is one of the borrower’s basic obligations. Choosing the wrong repayment date may, however, mean the necessity to pay criminal interest and unwanted entries in the credit history recorded in the BIK. Fortunately, in most banks, the borrower can freely choose the repayment date of the monthly installment.
The correct date will avoid criminal interest
The mortgage interest rate is currently 6-7 percent in the case of a PLN loan and 1-3 percent in the case of a foreign currency liability. However, even one day late in repayment may mean that interest on a part of the liability will increase by up to 25 percent. This happens when we pay the installment after the deadline, even in the event of a 1-day delay.
In such a case, the bank no longer charges interest at the standard interest rate, but at criminal interest rates. The applicable regulations limit its amount to 4 times the NBP lombard rate. At present, the level of criminal interest rate cannot exceed 25 percent and in most banks we have to pay this much for overdue payments.
Set when you want to pay back the loan
One way to settle installments properly and to avoid paying penalty interest is to set a repayment day for several days after receiving your salary. In most banks, we set this date at the stage of completing the application, in which we must select the day that suits us best.
Family on its own – the date is chosen by the bank
In the case of loans under the Good Finance program, the repayment deadline is usually imposed by the bank. Even in a situation where customers have the full option of choosing a date for a loan with no additional payments, there is no such choice for loans with additional payments.
It results from the agreement signed between a given bank and Bank Good Finance which pays subsidies. Due to the provisions of such contracts, customers cannot choose the date and all loans in the government program are repaid at the bank on the same day. Only a few institutions give the option of choosing a date even in the government program, but sometimes this choice is also limited to selected days of the month.
Pay regularly and you will save on insurance
The delay in paying the installment has measurable costs. If we are late with the repayment of PLN 2,000, we will pay less than PLN 1,40 for each day of delay. In the event of a delay that extends to 14 days, it will be around PLN 20.
If each installment will be paid with such a delay, because the postponement of the installment and remuneration will be this much, then the cost of penalty interest will be almost PLN 250 throughout the year. This amount will be equal to the approximate property insurance premium required by the bank.