Interest In Lieu
Interest in lieu is a calculation of interest charges within a period of time should a borrower still be holding onto the home loan.
This term is usually seen in refinancing when a borrower serves notice to the current lender about his intentions.
The interest-in-lieu enables a bank to charge interest expense which they would have received to borrowers.
The policies for interest in lieu can vary from bank to bank. But most often, a 3-month-notice is a term that is thrown around a lot.
For example, most banks would charge an interest in lieu if the notice for full redemption is served on or before the expiry of the 3 month period.
Again, because different lenders can have different policies, it is best to check with your banker about any interest in lieu which has to be paid when fully repaying the loan due to refinancing.
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