Definition
This is the higher interest rate (usually a few percentage points above your regular rate) charged on mortgage payments that are significantly overdue. It's a penalty that motivates people to pay on time.
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Applies when payment 15+ days late. Encourages prompt payment. Default rate specified in promissory note. Lender discretion on application. Payment brings account current. Professional communication offers payment plans. Default rate motivation for timely payment. Significant financial consequence. Late payment penalties. Professional collection practices. Avoid default interest.
Pro Tip
Default interest rates are expensive—maintain timely payments to avoid this penalty.
Example
Default interest rate of 7.5% applied to overdue payments at 5% regular rate.