2025-07-30 28Hse Editor
Have you ever missed a credit card payment? If so, you're probably familiar with late fees and the potential impact on your credit score. Sometimes, a quick call to the credit card hotline might help waive the penalty—but there’s no guarantee. But what happens if you're late on your mortgage payments?
Mortgage payment schedules are tied to the property's official completion date. Payments usually start one month after the completion date, with the bank automatically deducting the amount from your account. For example, if the property completion date is June 24, the first payment will be due on July 24, with subsequent payments falling on the same date each month.
If you forget or are unsure about your payment schedule, you can review your mortgage confirmation letter, repayment schedule, or your bank’s app, which should provide details such as the monthly payment amount, next due date, interest rate, and loan balance.
When it comes to which account should hold your mortgage funds, it depends on the bank’s requirements. Some banks deduct from savings accounts, while others may use checking accounts. It’s crucial to confirm this when signing your mortgage agreement to avoid any issues.
Homeowners might miss mortgage payments for various reasons. Forgetting to transfer funds to the designated mortgage account, cash flow issues, or delayed salary payments from employers are common causes.
If a mortgage payment is overdue, most banks will charge a late payment fee and/or penalty interest. Some banks calculate penalty interest on a daily basis, while others only impose it if the payment is more than seven days late. Certain banks may also have a minimum charge. Therefore, homeowners should carefully review the calculation methods outlined in the mortgage confirmation letter when signing it.
For instance, Bank of China charges a late fee of HK$500 per missed installment plus interest on overdue payments at a daily rate of 0.08%. HSBC, on the other hand, charges HK$400 per missed installment with a monthly interest rate of 2.25%.
While the financial penalties may seem manageable, the bigger problem is the impact on your credit record. Missing a mortgage payment for over a month can result in a record with TransUnion, Hong Kong’s credit bureau, which could affect your ability to apply for loans or refinancing.
For example, when applying for mortgage refinancing, banks require proof of on-time payments for the past three months. If they find late payment records, they may reject the application or increase the interest rate. To recover, borrowers would need to resume on-time payments for at least three months before reapplying. However, once a late payment is recorded, repeated delays can lower your credit score, making it harder to secure loans in the future.
If a payment is delayed for two months, the borrower becomes a high-risk client under the bank’s scrutiny. If the delay extends to three months or more, the bank may issue a “call loan,” requiring immediate repayment of the entire mortgage balance.
Paying your mortgage on time is essential to avoid penalties, damage to your credit score, and potentially legal action. If you’re facing financial difficulties, it’s always better to communicate with your bank early to explore possible solutions rather than risk missing payments.
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