Ideas for the Mambu Banking Engine

Australian Mortgage lending - Payment Schedule

What?

In Mambu the amortisation schedule and the repayment schedule are one and the same. The requirement is to largely separate the repayment schedule from the amortisation schedule (current Mambu schedule on Offset Loan)

The repayment frequency of a loan can be:

  • monthly (aligned with loan amortisation)

  • monthly (not aligned with loan amortisation)

  • fortnightly

  • weekly

Properties:

  1. The repayment schedule can be changed any number of times during the life of the loan without affecting the loan's Amortisation Schedule.

  2. The sum of repayments need to be equal to or more than the Minimum Repayment Amount for a given period/month

  3. Repayments in excess of the Minimum Repayment Amount for a given period do not carry over to the next period. These just reduce the outstanding principal balance and a full Minimum Repayment Amount is expected for next period. This works very similar to Mambu's allocation of prepayments to Next Instalment Only and Reduce Loan Term. Although the loan term is not reduced since the difference between scheduled and actual balance is available for redraw (see LNN-I-7).

  4. The repayment amount is flat like the Minimum Repayment Amount i.e. no breakdown between principal and interest.

  5. Missing a repayment will have the account go into arrears.

  6. The repayments can be direct debited from:

    • bank internal account (like a settlement account in Mambu)

    • bank internal offset account

    • bank external account

  7. Repayments can be reduced or suspended for any number of periods.

Repayments are thus more like promises to pay or a standing order than Mambu's repayment schedule.

Why?

This is common market practise in Australia. A separation between amortisation and repayment schedules is also a common approach in other markets.

  • Sascha Dannroth
  • Nov 2 2018
  • Planned
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