Payment Modification Thresholds (PMT Thresholds)
- 26 Jun 2025
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Payment Modification Thresholds (PMT Thresholds)
- Updated On 26 Jun 2025
- 1 Minute To Read
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Article summary
The Mambu system enhances loan payment management by utilizing "thresholds" that dictate when payment amounts are updated in the loan schedule, particularly in response to interest rate changes, overpayments, or fee capitalizations. A threshold is defined as a specific number of days before an installment's due date. If an event occurs before this threshold, the upcoming payment amount (PMT) is recalculated to reflect the change. Conversely, if the event occurs on or after the threshold date, the PMT remains unchanged, ensuring consistency with prior direct debit notifications. This threshold can be set at the product level but can be adjusted for individual accounts. Additionally, the PMT adjustment threshold determines if the total due for the current installment is recalculated after an interest rate change, depending on the timing of the change relative to the threshold. This system provides flexibility and accuracy in managing loan payments.
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To provide greater flexibility in managing loan payments, especially in response to interest rate changes, overpayments or fee capitalization actions, the Mambu system uses “thresholds”. These determine when upcoming payment amounts (PMT) are updated in the loan schedule. This ensures consistency with direct debit notifications and allows for immediate reflection of changes when appropriate.
How it works
A threshold is defined as a specific number of days prior to an installment's due date. When a relevant event (like an interest rate change, fee capitalisation or an overpayment) occurs, the system checks if the event date falls before or after this threshold for the upcoming installment.
Example of threshold calculation
Threshold = 15 days
dueDate=2024-05-20,directDebitDate=2024-05-05,transactionDate=2024-05-05, after threshold- If the transaction occurs in the exact day of the threshold it is considered as being posted after the threshold so the upcoming installment PMT is not recalculated.
Threshold=15 days
dueDate=2024-05-20,directDebitDate=2024-05-05,transactionDate=2024-05-04, before thresholdEvent occurs before threshold: If the event (e.g., interest rate change, overpayment) happens before the threshold date for the next scheduled installment, the PMT of the upcoming installment will be updated to reflect the change.
Event occurs after threshold: If the event happens after the threshold date for the next scheduled installment, the PMT of the upcoming +1 installment will be updated. The current or immediately upcoming installment's PMT will remain unchanged, preserving consistency with any already-sent direct debit notifications.
Note
No matter how the PMT is updated, interest accrual of the loan account always changes immediately when a relevant transaction occurs. This means the interest will be calculated based on divisions, taking into account any event posted to your account, such as an interest rate change, an overpayment, or fee capitalisation.
This threshold can be set up at the product level, acting as a default setting for any new accounts created under that product. However, this default value can be changed when an individual account is being set up.
PMT adjustment threshold determines whether the total due of the current installment is adjusted after an interest rate change or an overpayment. If the time interval between the interest rate change and the due installment is greater than the specified threshold, the total due is recalculated to reflect the new interest rate. Otherwise, the total due remains unchanged.
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