Payment holiday

Here you can find a generic example of how to set up a loan payment holiday for existing active loan contracts using the BackOffice. The details of setting up a loan holiday may vary depending on your loan product configuration. If the loan product configuration includes predefined rules for payment holidays, your options in the user interface will be respectively limited.

To set up the loan holiday, you must take the following steps:

Prior to creating the new contract version, the lender should negotiate the following contract conditions with the borrower:

1. Payment holiday duration. That will define the start and end date.

2. The amount of exception that the borrower wants to reduce from the repayment:

   • The total amount - to skip the repayment.

   • The principal amount - to pay only the interest.

   • The agreed amount - to reduce the repayment to a fixed amount.

3. Contract repayment schedule recalculation:

   • The scheduled length remains the same as in the original contract version - fixed length rule.

   • The amount of instalments remains the same as in the original contract version - fixed payment rule.

   • The amount of instalment and the contract length remains unchanged. However, the difference between the amounts after re-generation is assigned to the last payment in the loan repayment schedule - fixed payment length rule.

To create a new contract version:

• Find the loan contract in question:

  1. Loans > Search > Contracts.

  2. Fill in the search parameters > Search.

  3. To access the loan contract details, click the loan Contract number.

• Create a new contract version:

  1. Go to the Contract tab > click the Change contract button.
  2. Fill in the new contract version details > Create.

• Activate a new contract version:

  1. Click the sign on the Version tab to find a draft version.
  2. Click the draft version to open it.

  3. Click the Activate button.

To set up the payment holiday in the loan contract version, fill in the following parameters:

• Contract change type - select the Change repayment conditions value.

• Change reason - select the loan contract change reason: OTHER.

• Schedule re-generation rule - select the type of the loan contract re-generation rule:

  • FIXED_PAYMENT_LENGTH - choose this if you want the monthly repayment amount and the contract end date to remain the same. The last repayment is increased to recover the loan repayment in full.

  • FIXED_LENGHT - choose this if you want the contract end date to remain the same. The monthly repayment amount is increased to fit the fixed contract length.

  • FIXED_PAYMENT - choose this if you want the monthly repayment amount to remain the same. The contract end date is prolonged to fit the fixed monthly payment.

• Exceptions from regular payment amount - click to add a row and select one of the following exception types:

  • PAYMENT_LEAVE - choose this to set up a payment holiday without repayments.

  • INSTALLMENT_LEAVE - choose this to set up a payment holiday with interest repayments only.

  • PAYMENT_AMOUNT - choose this to set up a payment holiday with a predefined repayment amount.

• Enter the payment holiday Start and End dates.

• Fee - enter the fee amount, if applicable.

• Click Save and activate the contract version.