Ideas for the Mambu Banking Engine

An option to calculate loan interest based on a net (offset) balance

What: Support a new option for interest calculation on dynamic loans, that would be based on the net balance between the loan account and a designated “offset” deposit account.
 
The daily amount of accrued interest would be calculated as follows: 
 
Daily interest rate (%) 
* (outstanding loan principal balance 
   - (minus) offset deposit account balance)
 
Why: With this setup, organisations can give a client the benefit of recalculating the interest on a lower outstanding balance when a pre-payment is made and at the same time allow the client to:
  • withdraw the balance from the deposit account if needed (also known as “re-drawals”)
  • track the pre-payments amount on a separate account
  • do not expect the client to pay the interest/other dues on the instalment due dates if settlement accounts functionality is used
This is commonly known as an “offset” accounts and typically used by organisations offering mortgage loans.
  • Dorota Nosal
  • Nov 30 2016
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