Mortgage Grace Period: What Is It And How Does It Work?

6 Min Read
Updated March 6, 2024
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Written By
Miranda Crace
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There are many reasons a homeowner might make a late mortgage payment. Life can be unpredictable. Bank holidays, financial hardships or medical emergencies can all create a delay. Thankfully, mortgage lenders typically offer their borrowers a grace period. But how long does it last?

Let’s take a deeper dive into what a mortgage grace period is, how it works and some commonly asked questions.

What Is A Mortgage Grace Period?

A mortgage grace period is a set amount of time following the due date of a mortgage payment when any penalties are waived. If the full payment is not made during the mortgage payment grace period, a late fee will be charged and the missed mortgage payment will be reported to the credit bureaus.

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How Long Is A Grace Period For A Mortgage Payment?

The amount of time in the mortgage payment grace period varies by lender, but it’s usually 15 days or 2 weeks. If you don’t make your payment within this timeframe, you could be charged a late payment fee (which can be a set amount or based on your principal and interest). For example, if you have a monthly mortgage payment of $1,200 and get a 3% late fee, you’ll need to pay an extra $36.

 To be clear, you should always pay your mortgage on time if you’re able to, and a grace period doesn’t absolve you from having to make the payment. It merely gives you a little more time to pay it before late fees and other negative consequences set in. It’s also a great feature to have if you accidentally forget to make a payment but catch the mistake before the grace period has expired.

When Is A Mortgage Payment Considered Late?

Let’s consider the standard mortgage grace period. If your mortgage payment is due on the first of the month and your grace period is 15 days, your payment would be considered late on the 16th.

 If that falls on a weekend, you may have until the following business day to make the payment, but you should check with your lender to verify these terms. On the 16th (or following business day), you will be subject to the relevant penalties.

Is It OK To Pay Within The Mortgage Grace Period?

Yes, however, you should always strive to make your mortgage payment on or before its due date. The idea of a grace period is to allow late payments without consequences, but that doesn’t mean you should rely on it.

Grace periods are no doubt wonderful to have. They save forgetful homeowners lots of money each year, especially if their late penalty is calculated as a percentage of their monthly payment. That said, best practices from a credit score perspective encourage us to make our payments on or before the due date, so always go that route if you can.

One way to ensure this is to make payments online to avoid mail and bank processing delays. An even better solution is to enroll in automatic payments so your payments go through every month on time.

What If You Can’t Pay Within The Mortgage Grace Period?

If you’re unable to make your payment when it’s due or even within the mortgage grace period after it’s due, your payment will be considered late and there are a few consequences you can expect.

Added Late Fees

First off, late fees will be imposed in the form of a flat fee or a percentage of your monthly payment amount. This policydepends on your lender, so some borrowers may get hit harder than others, but we all prefer to avoid servicing fees and penalties when we can.

Obviously, late fees can really add up and put a growing financial burden on you. If you can, try to make your payment as soon as possible and pay on time next month to avoid additional fees in the future.

Lower Credit Score

Beyond fees, late mortgage payments are a big no-no when it comes to your credit score. After 30 days, your lender will report the late mortgage payment to the credit bureaus. 

Failure to make a timely mortgage payment will land on your credit report and cause your credit score to drop significantly. This will make borrowing in the future more expensive and difficult as you work to repair your credit

FAQ

Let’s look at the answers to some frequently asked questions about mortgage grace periods.

A mortgage grace period is a set duration of time after the due date of a mortgage payment that forgives the borrower of any penalties as long as the payment is made during that period. If a payment is made after the mortgage grace period, the payment is considered late, and the borrower is subject to penalties.
While there may be information about grace periods on your billing statement, the first thing to do is to look at your mortgage note. The note includes the date of the month that your mortgage is due (usually the first of the month) and whether you have a grace period in which you can pay, among other stipulations. If there is no grace period mentioned on your mortgage loan note, it doesn’t exist.
To protect borrowers from late fees, many states have laws that make it illegal for mortgage companies to not offer grace periods. In addition, lenders know that different borrowers have different days of the month when they pay their mortgage, so grace periods take that into account. They also understand that many factors outside a borrower’s control can delay a payment.
If you don’t pay your mortgage payment on time, you can expect a fee and a possible ding to your credit score – sometimes it can even mean losing your home. A grace period eases these consequences a bit, ensuring that fees or credit nicks don’t happen right away if you make a late mortgage payment.
Talk to your lender as soon as you fall behind on your mortgage payment. Tell them the circumstances you’re facing that are preventing you from paying and let them know when you’ll be able to start making your home loan payments on time again.
Homeowners are allowed to pay their mortgage during the grace period without penalties. Although, that doesn’t mean you should always make your payment after the due date. Borrowers should strive to make their payments before or on the due date to help keep a consistent payment schedule.
Mortgages and refinance loans typically come with a grace period, but credit card companies aren’t legally obligated to give users a grace period. However, many issuers may offer this feature to users. Personal lines of credit also might not offer a grace period. It’s best to check with your lender or credit card company to find out what their terms and conditions are.

The Bottom Line: Mortgage Grace Periods Offer Flexibility

Grace periods are a great way to gain a little wiggle room when it comes to paying your mortgage. First, though, you should check your mortgage note to make sure you’re crystal clear on the terms of your loan.

Do the best you can to make your mortgage payment on or before the due date. If you can’t, avoid late fees and credit hits by paying before the grace period ends. If you’re struggling to make consistent payments, learn how to avoid foreclosure and tips for getting back on your feet.

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