What is the penalty called when a borrower pays after the due date?

The penalty incurred when a borrower fails to make a payment by the due date is referred to as a late charge. This fee is typically outlined in the loan agreement and serves to compensate the lender for the additional administrative costs and risks associated with late payments. Late charges encourage borrowers to make timely payments and can vary based on the loan terms and lender policies.

In this context, the other terms mentioned do not pertain to penalties for late payments. An installment refers to a portion of the principal and interest that is paid periodically, often monthly, over the duration of the loan. The initial interest rate is the starting rate that a borrower agrees to pay on their loan, and it generally may change after an agreed-upon period if the loan is an adjustable-rate mortgage. Lastly, a leasehold pertains to rental agreements where one party holds rights to use property owned by another party, which is unrelated to the concept of late payment penalties in a mortgage context.