Loan Management

The Loan Management tab models private loans administered inside a matter — vendor take-back mortgages, shareholder loans, settlement financing, construction draws, and similar arrangements. It produces the amortization schedule, tracks each payment’s interest / principal / fees split and running balance, and — when the loan is wired to a trust account — handles receiving payments into trust and paying them out to lenders and third parties through By-Law 9 requisitions.

This page documents the whole feature in depth: how a loan is configured, how the schedule is built, how payments flow through trust, and the exact interest math behind every figure — so the numbers can be independently verified against the governing loan documents.

Setting up a loan

Each loan carries the principal amount, an advance date, an interest rate, an amortization period, and the conventions below. A matter can hold more than one loan.

Parties

Loan parties are drawn from the matter’s participants and tagged with a capacity:

Capacity	Role
Borrower	Owes the loan. In-trust funds received against the loan are attributed to the borrower (per-client trust view, By-Law 9 §10) until a payment is applied.
Lender	Is owed principal & interest. The lender’s classification (firm client vs. external) drives how payouts are routed — see Paying out.
Guarantor	Secondary obligor recorded for completeness; carries no posting behaviour.

Status lifecycle

A loan moves through Pending → Approved → Active → Closed, with Cancelled available as a terminal state. Status is informational — it does not gate the schedule math — but it keeps the matter’s loan list meaningful at a glance.

Trust-serviced vs. calculator-only

Setting a trust account on the loan makes it trust-serviced: receiving and paying out payments post real trust entries against that account. With no trust account, the tab is a pure calculator / tracker — it builds the schedule and tracks paid status, but posts nothing to trust or the general ledger. You can start as a calculator and attach a trust account later.

Payment frequency

The schedule supports eleven payment frequencies:

Daily · Weekly · Bi-weekly · Semi-monthly · Monthly · Bi-monthly · Quarterly · Semi-annually · Annually · Every 4 weeks · Every 4 months.

Frequency sets the number of payments per year (ppy), which in turn drives the per-period interest (see How interest is calculated). The amortization period is entered in years, months, weeks, or days.

Payment types

The payment type controls how each instalment is composed. All eleven types are supported:

Payment type	What it does
Normal (P+I)	Level blended payment; principal and interest re-split each period as the balance falls. Amortizes to zero.
Interest only (static)	Pays the interest on the original principal each period; principal is due at maturity.
Interest only (adjusted)	Pays the interest on the current balance each period (relevant when the balance changes via extra payments).
Fixed principal + interest	A fixed principal portion each period plus the period’s interest — payments step down over time.
Increasing (fixed $)	Payment increases by a fixed dollar step each period.
Increasing (%)	Payment increases by a percentage step each period.
Increasing annually (fixed $)	Payment steps up by a fixed dollar amount once per year.
Increasing annually (%)	Payment steps up by a percentage once per year.
Constantly adjusted	Payment is recomputed each period to keep amortizing the remaining balance.
% of outstanding balance	Each payment is a percentage of the current balance.
No payments (interest accumulates)	A balloon loan — no periodic payments; interest accrues and the whole balance is due at maturity.

The amortization schedule

Generating the schedule produces one row per scheduled payment, each carrying:

# — payment number, in date order.
Scheduled date — derived from the advance date + frequency.
Scheduled amount — the instalment for that period.
Interest — interest accrued for the period on the outstanding balance, under the loan’s conventions.
Principal — the portion reducing the balance (scheduled amount − interest − fees).
Other — the total of any per-payment Breakdown items that apply to this payment (see below).
Balance — the running outstanding principal after the row.

Regenerating the schedule preserves rows already marked paid and rebuilds only the unpaid projection, so recording payments never disturbs the history.

Variable rates and renewals (terms)

Two mechanisms model rate and structure changes over the life of a loan:

Rate schedule — a list of (effective date → annual rate) steps. Each schedule row uses the rate in effect on its date, so a variable or stepped-rate loan amortizes correctly across changes.
Terms (multi-segment) — a renewal/segment can change the rate, compounding, day-count, and payment type for a date range, modelling a mortgage that renews onto new terms partway through its amortization.

Breakdown items (per-payment add-ons)

Breakdown items are recurring per-payment charges layered on top of principal & interest: late fee, penalty, insurance, taxes, service charge, other. Each item can be a fixed amount or a calculated one, can apply from a given payment number onward, and can carry a payee (a matter participant or a free-text name). The payee matters at payout time: items with an external payee are disbursed through trust; items with no payee (e.g. the firm’s own charges) are tracked but not auto-disbursed — they leave trust only once invoiced.

Escrow into payment

By default, recurring items (tax, insurance, …) are shown as a separate “Items” / “Total due” line: the fixed principal-and-interest payment stays exactly as computed, and the borrower’s total obligation is P&I plus the items. Turn on the per-loan “Escrow into payment” toggle (on the Underwrite/Terms form) to switch to true escrow: the periodic payment is re-sized to P&I + the recurring items total per period, so a single fixed payment covers tax/insurance. The principal/interest split is identical either way — only the collected payment figure changes. The setting defaults to off, so existing loans keep their current schedule unchanged.

Payment allocation order

The per-loan “Apply payments in this order” setting controls how a short (under-) payment is split. There are two presets:

Items → Interest → Principal (default) — the private-loan servicing convention.
Interest → Principal → Items — borrower-friendlier.

It is a loan-level setting (not per-payment) and only matters when a payment is short of the amount due; a payment that covers the full amount is split normally regardless. (A regulated-consumer Interest→Principal→Fees ordering is held attorney-review-pending with its citation before it is ever applied to consumer lending.)

Negative-amortization warning

If a loan’s fixed or interest-only payment is set below the period’s interest, the payment can’t even cover the interest and the balance grows each period (true negative amortization). The Underwrite view shows a setup advisory banner when this is detected. It is advisory only — it never blocks saving; increase the payment or shorten the amortization to clear it.

How interest is calculated

This is the core of the engine. Every schedule row charges interest on the outstanding balance at a periodic rate derived from the loan’s annual interest rate, its compounding method, and its payment frequency. Writing a = annual rate (as a decimal, e.g. 7.5% → 0.075), ppy = payments per year, and n = compounding occurrences per year, the periodic rate is:

Compounding method	Periodic rate formula	Notes
Discrete (Daily, Weekly, Monthly, Quarterly, Semi-annually, Annually, every-4-weeks, every-4-months, …)	`(1 + a/n)^(n/ppy) − 1`	Effective annual `(1 + a/n)^n − 1`, taken to the per-period root.
Canadian mortgage (semi-annual)	`(1 + a/2)^(2/ppy) − 1`	Identical to semi-annual compounding (`n = 2`); the legal default for Canadian mortgages.
Simple interest (U.S. Rule)	`a / ppy`	No inter-period compounding.
Continuous (per-period)	`(eᵃ − 1) / ppy`	The continuous effective-annual rate `eᵃ − 1` apportioned arithmetically across the periods. See below.
Continuous (compounded)	`e^(a/ppy) − 1`	Textbook continuous compounding — interest compounds continuously within each period too. See below.

For a normal full period, that period’s interest is simply balance × periodic rate. For an irregular period (a short or long first/last period, or an interest-adjustment stub), the rate is pro-rated by the selected day-count convention (below).

The two “Continuous” options

Athenty offers two continuous-compounding conventions because the term “continuous” is used to mean two genuinely different calculations, and loan documents do not agree on which one they mean. Both share the same continuous effective annual rate, eᵃ − 1 — they differ only in how that annual figure is split across the payment periods:

Continuous (per-period) — periodic = (eᵃ − 1) / ppy. The continuous effective-annual rate is divided arithmetically by the number of payments per year. It charges slightly more interest per period than the compounded formula.
Continuous (compounded) — periodic = e^(a/ppy) − 1. Interest compounds continuously within the period as well, so the periodic rate is the geometric per-period root of eᵃ − 1. This is the mathematically rigorous definition of continuous compounding. It charges slightly less per period than the per-period convention.

Worked example, 6.00% nominal, monthly payments (a = 0.06, ppy = 12):

Method	Periodic rate	Interest on a $100,000 balance, first period
Monthly compounding	`0.06/12` = 0.500000%	$500.00
Continuous (compounded)	`e^(0.06/12) − 1` ≈ 0.501252%	$501.25
Continuous (per-period)	`(e^0.06 − 1)/12` ≈ 0.515305%	$515.31

Over a full amortization these differences accumulate. Pick the option that matches how your loan agreement defines “continuous” compounding — if the document does not specify, neither does Athenty assume one for you.

Day-count conventions

For irregular periods, the periodic rate is scaled by the fraction of the period actually elapsed, measured under the loan’s day-count convention. Athenty supports the full standard set, including:

30/360 and its variants (30E/360, 30E+/360, 30/365, 30/Actual) — months treated as 30 days, with the relevant end-of-month rules (including the NASD end-of-February rule under 30/360).
Actual/Actual (ISDA), Actual/365 (Fixed), Actual/365 (incl. leap), Actual/360, Actual/364.
360/360, ISMA, 365.25/365.25.

Under the Actual/365 (incl. leap) convention the 366/365 leap-year denominator is keyed off the period-start year.

These day-count conventions follow the standard market definitions — the ISDA day-count fraction definitions (2006 ISDA Definitions, §4.16) are the widely-cited reference for Actual/Actual (ISDA), Actual/365 (Fixed), Actual/360 and the 30/360 family; for the 30/360 (Bond Basis) and 30E/360 (Eurobond Basis) end-of-month rules see the ISDA 30/360 day-count summary. Athenty applies these as calculation conventions; it is your responsibility to select the convention your loan agreement specifies.

Interest in advance — two modes

Some loans collect interest in advance (at the start of each period) rather than in arrears (at the end). Athenty offers two in-advance models — pick the one your lender’s commitment uses. Existing loans default to Annuity-due; new loans suggest Interest prepaid (the model that matches standard reference calculators).

Mode	Payment amount	First payment	Each period’s interest
Interest prepaid (suggested)	the ordinary payment (same as a payment-in-arrears loan)	carries the first period’s interest up front (plus the IAD→first-payment interim, if the first payment is after the IAD)	collected at the start of the period
Annuity-due	the ordinary payment ÷ (1 + period rate) — a slightly smaller payment	pure principal (no interest, since none has accrued yet)	accrues on the running balance, period by period

Why two? They answer the same question differently. Annuity-due treats a start-of-period payment as worth (1 + rate) of an end-of-period one, so it reduces the payment. Interest prepaid keeps the ordinary payment and simply front-loads the interest — the first payment looks larger (it carries a whole period of interest before any principal), and the balance can even tick up on the first row when the first payment lands after the IAD.

Worked example — Interest prepaid

$100,000 at 10%, monthly, 30/360, 20-year amortization, first payment on the IAD (2021-03-01). Ordinary payment $965.02. The first row collects one month’s interest up front:

interest = $100,000 × 10% ÷ 12 = $833.33 · principal = $965.02 − $833.33 = $131.69 · balance $99,868.31

If instead the first payment is one month after the IAD (2021-04-01), the first row carries both the elapsed interim month and the upcoming month’s prepaid interest — interest $1,638.89, principal −$673.87, so the balance rises to $100,673.87, then amortizes normally from there.

Worked example — Annuity-due

Same loan, annuity-due. The payment drops to $965.02 ÷ (1 + 10%/12) = $957.05, and the first payment is pure principal — interest $0.00, principal $957.05, balance $99,042.95 — because the payment is made at origination before any interest has accrued. Interest then accrues on the reduced balance from the second period onward.

In both modes a variable rate schedule flows through correctly, including rate changes that fall mid-period.

Interest adjustment

When a loan’s advance date (the day funds close/disburse) differs from its interest-adjustment date (IAD — the day regular periodic interest begins and the amortization clock anchors), Athenty computes the interim interest for the in-between days. Two settings control this:

Interest-adjustment basis — Actual/365 per-diem (a simple daily rate) or Loan day-count (the loan’s own day-count convention).
Adjustment applied — charged at advance (closing), at the interest-adjustment date, folded into the first payment, or capitalized into principal (added to the balance instead of paid).

This mirrors the standard Canadian mortgage practice of an interest-adjustment date with a separate closing-to-IAD interest charge.

Advance date before the IAD (the usual case)

Funds advance partway through a period and regular payments anchor to a later IAD (typically the 1st of the next month), so interest accrues on the full advance for the gap. On the Actual/365 basis that interim interest is:

principal × annual rate × (days from advance to IAD) ÷ 365

Worked example. $100,000 at 6%, advancing 2026-01-15 with an IAD of 2026-02-01 (17 days): 100,000 × 0.06 × 17 ÷ 365 = $279.45. The schedule shows the two events in date order — an Advance row (the principal becomes outstanding, balance = $100,000) then the IAD row — so the timeline reads Advance → IAD → first payment. With the paid treatments (at advance / at the IAD / into the first payment) the regular amortization rows are never altered.

The interim interest differs by basis

The basis you pick changes the dollar amount, because the two methods count days and apply the rate differently:

Actual/365 per-diem counts the actual calendar days and applies a flat daily rate (annual rate ÷ 365). For the example above that is the $279.45 over 17 calendar days.
Loan day-count counts the gap in the loan’s own day-count convention and applies the compounded periodic rate. For the same loan on a 30/360 convention, the 2026-01-15 → 2026-02-01 gap is 16 day-count days (30/360 counts the partial month as 30 − 14), giving 100,000 × periodic-rate × 16 ÷ 360 × payments-per-year = $263.39.

So the same gap can produce $279.45 (Actual/365) or $263.39 (30/360 day-count) — the basis is a deliberate, per-loan choice. Pick the basis your lender’s commitment specifies, and verify the result against the lender’s own figure.

Where the interim interest lands

For the three paid treatments the dollar amount is identical; only when/where it is collected changes — so the total interest the borrower owes is the same. The fourth treatment, capitalize, is different: the interim interest is not paid — it is added to the principal, so it accrues onward and the borrower pays more in total (a larger final balloon), exactly as if a payment had been missed.

Adjustment applied	What happens	Cash-flow timing
At advance (closing)	The interim interest is charged on the Advance row	Collected up front, usually deducted from the advance proceeds at closing
At the IAD	The interim interest is charged on the IAD row	Collected on the interest-adjustment date
Folded into the first payment	Added to payment 1’s interest (and its amount)	Collected with the first regular payment
Capitalize into principal	Not paid — added to the balance on the IAD, so the IAD row’s balance grows by the interim interest	Never collected separately; it accrues into a larger final balloon. The Term (number of payments) and the regular payment are unchanged.

Capitalize worked example. Same $100,000 / 6% / 17-day loan: instead of paying the $279.45 stub, it is added to the balance at the IAD, so the IAD row shows a balance of $100,279.45. Every period then accrues on the grown balance; the regular payment stays the same and the 300-payment Term is unchanged, so the loan clears with a larger final balloon (and slightly more total interest, because the capitalized amount itself accrues).

Advance date after the IAD

When funds close after the interest-adjustment date, Athenty applies the true-up rule: interest accrues only on money actually advanced. No interest is charged for the days between the IAD and the advance date, because nothing was outstanding yet. Instead, the first payment simply carries interest for the partial period from the advance date to the first payment date (computed on the face principal with the loan’s own day-count, exactly like every other period) — so the first payment’s interest portion is smaller and more of it goes to principal. The IAD is shown as a $0 anchor row so the schedule reads IAD → advance → first payment, and there is no separate credit row. The regular payment amount is unchanged (it is still solved over the full term); the small first-period saving sends a touch more to principal, so the loan retires a hair early and the final payment is marginally smaller.

Worked example. $500,000 at 6%, semi-annual compounding, monthly, 25-year amortization, 30/360, IAD 2026-02-01, first payment 2026-03-01, advance 2026-02-15 (14 days after the IAD): no interest accrues Feb 1 → Feb 15; the first payment (Mar 1) charges only the Feb 15 → Mar 1 partial period, 500,000 × periodic-rate × 16 ÷ 360 × 12 = $1,316.97 (16 day-count days), with the remaining $1,882.06 of the $3,199.03 payment going to principal.

Edge cases

Advance on the IAD → no gap, so no interim-interest charge.

The advance

On a trust-serviced loan, when the funds close and disburse, a bookkeeper marks the loan funds advanced. This posts the gross advance into trust as a single trust_receipt dated the loan’s advance date (or a date you choose), attributed to the borrower so the per-client trust view (By-Law 9 §10) shows the funds as the borrower’s. Marking it is explicit — the advance does not post automatically when the loan goes active — and idempotent: re-marking an already-advanced loan does nothing. Un-marking funds advanced reverses the receipt (and any deductions below) and returns the loan to its pre-advance state.

Advance deductions

A loan’s loan/mortgage commitment typically discloses costs payable from the first advance — an interest adjustment, a broker fee, and any other add-on you set up as an advance Item (mark the Breakdown item applies at advance). When you mark funds advanced, each such Item with a payee and a positive amount is disbursed straight out of the gross advance, each through its own Form 9A requisition — the same trust-disbursement path as a payout (auto-released under your org’s threshold, sent for signatures above it; the legs are independent, never all-or-nothing). An advance Item with no payee is skipped — it leaves trust only once invoiced.

These deductions are contractual: they are authorized by the costs the borrower’s loan commitment discloses as payable from the first advance, and they otherwise follow your firm’s normal trust-accounting rules. There is no specific By-Law rule that dictates them, so the app attaches no statutory citation to them.

Un-marking funds advanced reverses each posted deduction (returning the cash to trust) — or voids it if it was still awaiting signatures — before reversing the advance receipt itself.

Sometimes the advance never passes through your trust account: the lender advanced directly to the borrower, or you are onboarding a loan that was already funded before your firm was engaged. In the Mark funds advanced dialog, tick Advanced outside our trust (no trust receipt) and add the required explanation note (why and when the funds moved outside trust). The advance is then recorded for tracking and servicing only — the schedule, payout and breakdown all still work, but no trust receipt, gross reallocation, deduction legs or disposition are posted, because no money moved through your trust. Any advance-scoped deductions stay recorded for the breakdown and likewise post no trust legs. A loan that is not trust-serviced can only be advanced this way. Un-advancing clears the flag and note (there is nothing in trust to reverse). The note surfaces on the trust-comparison and discharge statements so a reviewer can see why money bypassed trust.

Receiving payments

When a borrower pays, mark the schedule row paid (with the actual date and amount). On a trust-serviced loan this is a one-click trust receipt — it posts a trust_receipt against the loan’s trust account for the amount received, attributed to the borrower so the per-client trust view (By-Law 9 §10) shows the funds as the borrower’s until they are applied. Receipts are never threshold-gated, so recording a payment stays a single action.

Same-matter lender shortcut. If the lender is a client on the same matter, the borrower→lender principal & interest reallocation posts the moment the payment is received into trust (provided the matter holds enough to cover it). In that case the Payout step only ever moves money out of trust — the in-trust ownership has already moved to the lender.

Paying out (payouts)

Once a payment has been received into trust, the Payout action disburses what is owed. Each leg is handled independently — never all-or-nothing — and routed according to By-Law 9:

Third-party Breakdown items (insurer, municipality, etc.) are each disbursed on their own trust requisition (Form 9A). A leg under the organization’s signature threshold auto-releases; a leg at or above it is sent for signatures and releases when signed. Legs resolve on their own — an under-threshold insurance leg can release while an over-threshold leg still awaits a signature.
The lender’s principal & interest leg is disbursed by Form 9A requisition when the lender is external (not a firm client).
The firm’s own fees are never auto-disbursed here. Items with no external payee are tracked but leave trust only once invoiced — Payout does not move firm fees out of trust.

A trust-sufficiency guard blocks a payout the matter can’t cover, and the operation is idempotent: a leg already disbursed is skipped, so re-running Payout never double-pays.

For the underlying trust mechanics — requisitions, signature thresholds, and the per-client trust ledger — see Trust accounting and the matter Trust tab.

Extra payments, overpayments & draws

The schedule reacts to three kinds of off-schedule money movement. All three change the running balance — and therefore the interest on every later period — but they are computed differently:

Additional (extra) payments

An additional payment is extra principal paid alongside (or between) regular payments. It is a principal-only entry — the whole amount reduces the balance and no interest is figured on it — dated with its payment. Because the balance drops, every later period accrues less interest and the loan pays off sooner.

Example. On a $100,000 loan at 7.5% (monthly), a $10,000 extra on payment 1 takes the balance from $99,925.79 to $89,925.79, and payment 2’s interest falls from $624.54 to $562.04.

Overpayments

An overpayment is simply a payment larger than the scheduled amount. The surplus over the scheduled payment is treated exactly like an additional payment — it reduces principal — so an overpayment and an equal-surplus additional payment produce the same schedule. A large enough overpayment clears the loan early, and the surplus is never applied past the remaining balance (you can’t overpay below zero).

In-period accrual segmentation

An extra payment or a draw can land inside a regular period — between two scheduled payment dates — not just on a payment date. When it does, Athenty segments the period’s interest at the event date so each slice of the period accrues on the balance that was actually outstanding for it:

The stretch from the period start up to the event accrues on the pre-event balance.
The stretch from the event to the next payment accrues on the post-event balance.

Mechanically, the extra/draw row is treated as intra-period: it carries no interest line of its own (it only moves principal), and it does not advance the interest-accrual clock — so the next regular payment’s interest is figured on the post-event balance for the part of the period after the event, with the pre-event portion already reflected in the prior row’s accrual. The net effect is that interest is charged on the right balance for the right number of days, to the cent.

Same-date events (an extra or draw dated on a payment date) apply at the period end — they take effect after that period’s interest is computed, so they shape the following period rather than splitting the current one.

Draws (re-advances)

A draw is the opposite of an extra payment: additional principal advanced to the borrower mid-loan (staged construction advances, a re-advanceable facility, or a loan increase). A draw increases the balance, so later periods accrue more interest, and — at a fixed payment — the amortization period (payoff horizon) extends until the larger balance is repaid. The Term / maturity does not move: it is a fixed contractual field. On a fixed-Term loan the same draw instead leaves a larger balloon at the Term maturity rather than pushing the maturity out (see Term vs. Amortization). A draw shows as its own row (the cash advanced out, recorded as negative principal); it carries no interest itself — interest on the drawn funds first appears in the next period.

Example. On a $100,000 loan at 6% (monthly), a $20,000 draw on payment 1 takes the balance from $99,855.70 to $119,855.70, and payment 2’s interest rises from $499.28 to $599.28 (exactly one period’s interest on the extra $20,000). The loan still amortizes fully to a zero balance — the amortization just takes more payments (the Term is unchanged).

The draw lifecycle

A draw is an event, not a future obligation, so it carries its own Pending → Advanced → Reversed lifecycle (distinct from the Scheduled / Paid / Late / Missed model that applies to scheduled payments):

State	What it means	Schedule & trust effect
Pending	The draw is recorded/requested but the funds are not yet out.	No balance increase, no re-amortization, no trust legs.
Advanced	The funds were advanced.	Balance increases by the gross, the remaining schedule re-amortizes, and (unless advanced outside trust) the trust legs post.
Reversed	The advance was unwound (kept for audit).	The balance increase, re-amortization and any trust legs are reversed.

You can record a draw in one step (record-and-advance) or two steps (record as Pending, then advance later) — both run the same advance core, so the balance, re-amortization and trust posting are identical once advanced.

Re-amortization choice (when advanced). By default the draw is keep-payment: the scheduled payment is left unchanged, the interest / principal split re-derives over the now-higher balance, and the engine balloons the final row to clear the extra at the fixed Term. Optionally you can recalculate the payment off the higher balance — over the remaining amortization, or over a new amortization period you enter.

On a trust-serviced loan, advancing a draw posts: a lender-funded receipt into trust, a lender→borrower gross reallocation (so the draw becomes the borrower’s in-trust funds), any deduction Items disbursed out of the gross (each its own Form 9A leg), and the net routed per the chosen disposition — pay out (Form 9A requisition to the borrower), hold in trust (only when the borrower is a matter client), or cross-matter transfer. A trust-sufficiency guard blocks a pay-out the matter can’t cover. As with the initial advance, you can tick advanced outside our trust (with a required explanation note) to record the draw for tracking and servicing only — the schedule re-amortizes but no trust legs post. Reversing a draw unwinds the disposition, deductions, reallocation and receipt in order, then drops the draw’s schedule row and restores the pre-draw rows byte-exactly.

Term vs. Amortization

These are two different things, and the engine keeps them distinct:

The Amortization period is the payoff horizon — it sizes the payment and can grow or shrink as the balance changes (a draw lengthens it; an extra/overpayment shortens it).
The Term (and its maturity date) is a fixed contractual field. It does not move when the amortization changes.

So when a draw raises the balance at a fixed payment, the amortization period extends — not the Term. On a fixed-Term loan, any balance still owing at the last Term row settles as a balloon at the Term maturity rather than pushing the maturity out (see Editing & early payoff). The Term only changes if you edit the Term itself.

Editing & early payoff

Inserted / edited rows. Insert a row after any payment, or hand-edit a scheduled amount; the schedule re-derives the downstream interest / principal split with the day-count engine. Inserting re-sequences the payment numbers (later rows shift down by one) and re-amortizes forward off the new balance. If an edit pays the loan off early, the trailing unpaid rows are dropped; if a balance remains at the last row, it balloons into that final payment.
Paid rows are immutable on cash. A payment already marked paid is never rewritten by a recompute — the recorded amount, fees and paid-date are preserved exactly as received, and a back-dated change surfaces as an adjustment owed instead. (The row’s displayed interest / principal split may still re-derive so the running balance stays continuous, but the cash record never moves.)

Missed and late payments

A scheduled payment that is missed or paid late is handled differently from an off-schedule extra or draw — and, critically, neither one changes the per-period interest accrual math. The interest each period is always balance × periodic-rate × day-count-fraction, computed the same way whether or not a payment was on time.

Missed payment — interest capitalizes

When a regular payment is marked missed, nothing is collected that period, so its accrued interest capitalizes into the balance. The period’s interest is accrued exactly as normal (no change to the math); because it is not paid, it is folded into the running balance (the payment column shows 0), and no per-payment Items apply to a missed row. The Term stays fixed, so the unpaid interest grows the final balloon — the same way a capitalized interest-adjustment stub does. Only a regular scheduled row can be marked missed (not an extra, a draw, or an already-paid row).

Late payment — fee and default-rate Items

When a payment is recorded as paid after its grace period, Athenty marks it Late and, if the loan’s terms provide for them, adds two contractual charges as per-payment Items — it does not alter the interest accrual:

Late fee — a fixed amount if the loan specifies one, otherwise a percentage of the scheduled payment.
Default-rate (penalty) interest on the arrears — only when the loan carries a default rate. It is figured on the amount in arrears at the effective default rate (base + spread — see Default-rate (penalty) interest on arrears), for the overdue days, using the loan’s own day-count convention.

These are added Items layered on top of the row — they are idempotent (re-deriving replaces only the auto-generated late rows, never a bookkeeper-entered fee) and they never touch the per-period interest that the amortization engine computes.

Default-rate (penalty) interest on arrears

When the loan carries a default rate, overdue amounts bear penalty interest in addition to (and on top of) the regular amortization. Three settings define exactly how that charge is computed:

Add-on spread. The default rate is a spread added above the then-current base rate, not a flat substitute rate. Arrears therefore effectively bear base + spread. Because the spread rides on top of the base, variable-rate fluctuations carry through: if the base rate steps up or down (via the loan’s rate schedule), the effective default rate follows it. For example, a 5% spread on a loan whose base moves 6% → 7% yields an effective default rate of 11% → 12% over the corresponding days.
Day-count. The penalty interest is figured using the loan’s own day-count convention — the same convention that governs the regular schedule (30/360, Actual/365, Actual/Actual (ISDA), etc.; see Day-count conventions) — so the arrears charge counts days the same way the rest of the loan does.
Grace toggle. You choose whether grace days are included in the default-rate calculation — penalty accruing from the due date — or excluded — penalty accruing only after the grace period ends. The toggle does not change the late-fee logic, only the day-count window over which default-rate interest is charged.

Some jurisdictions restrict or prohibit penalty or default rates on arrears of interest or principal. For real-property mortgages in Canada, the federal Interest Act (Canada), s. 8 prohibits charging a higher rate on arrears than the rate payable on principal money not in arrears — a default-rate spread on a mortgage may therefore be unenforceable to the extent it exceeds the non-arrears rate (see Krayzel Corp. v. Equitable Trust Co., 2016 SCC 18). See the authority: Interest Act (Canada), s. 8.

Athenty surfaces this as a warning and applies the rate, spread and grace treatment you enter — it does not auto-cap, recompute, or block the charge. These figures are Suggested — verify against the loan documents and applicable law; this guidance is attorney-review-pending.

Specialised servicing schedules

Two payment conventions produce schedules whose maturity or row count is not a simple count of periods. The engine implements each at the level described below.

U.S.-Rule simple-interest escrow servicing

Under Simple Interest (U.S. Rule), each period’s interest is figured on the outstanding principal only at the simple periodic rate (annual ÷ ppy). When a payment does not cover the period’s interest, the shortfall is not capitalized onto principal — it is deferred into a separate escrow balance, and principal is left untouched. On later periods where the payment exceeds the interest due, the surplus first draws the escrow balance down, and only the remainder amortizes principal. Because the deferred interest must be repaid before principal starts falling, the payoff can run past the nominal payment count — the schedule terminates when principal reaches zero, not at a fixed number of rows. Each row reports its escrow portion and the running escrow balance alongside the usual columns.

Constantly-adjusted, maturity-anchored recompute

For the Constantly adjusted payment type, the payment is recomputed each period to keep amortizing the remaining balance over the remaining term. The engine anchors the maturity date to the interest-adjustment date plus the loan’s term measured in the loan’s own day-count units — it solves for the exact calendar date at which the elapsed day-count fraction reaches the term length (a deterministic search over calendar days). Anchoring to maturity this way keeps the recompute stable across rate changes and odd periods rather than drifting by a row.

Early payments and rate boundaries

When a payment is received before its scheduled date and an interest-rate change falls between the early-received date and the next scheduled payment, Athenty charges the early-credit days at the rate actually in effect during them. A rate change in that window does not forfeit the early-credit days, and it does not re-anchor the accrual clock to the scheduled date — each slice of days simply accrues at whatever rate was in force while it elapsed.

This is the economically correct treatment: the borrower paid early, so the days between the early payment and the next due date are genuinely “bought” at the rate that applied to them. The larger the early gap, the more days are affected — anchoring instead to the scheduled date would wrongly charge some of those days at a rate that had not started yet, over-charging (or under-charging) the borrower in proportion to how early they paid.

Athenty’s schedule matches QuikCalc cent-for-cent on the early-payment / rate-boundary validation scenarios (Test 58, Test 59 and Test 60 of the reference set). This is a settled convention.

Conventions under review

Reversing a payment (NSF)

To reverse a recorded payment — e.g. an NSF cheque — un-mark the row as paid. On a trust-serviced loan this reverses the linked trust receipt (and first unwinds any borrower→lender reallocation it created, returning ownership of the funds to the borrower).

Two guards protect trust integrity:

Sufficiency on already-paid-out payments — if the payment was already applied (its payout legs left trust), the matter must still hold enough trust to absorb pulling the receipt back. If it doesn’t, Athenty blocks the reversal and tells you how much is needed — collect the funds back into trust, or reverse the payout requisitions, first. (Reallocation legs kept the money in trust, so they don’t trigger this guard.)
Reconciled periods are frozen — a receipt that has already been bank-reconciled cannot be reversed in place; reverse it in the next open period, per By-Law 9 reconciliation rules.

How interest, principal & trust funds are tracked

Putting the pieces together:

Per payment, the schedule stores the interest, principal, and fees (other) components and the running balance — so every row is fully attributable and the loan’s outstanding principal is always current.
In trust, each received payment is a trust receipt attributed to the borrower; each payout leg (item disbursement, lender disbursement, or beneficial reallocation) is a matching trust entry. The loan’s trust activity therefore reconciles inside the matter trust ledger exactly like any other trust transaction, and rolls into the By-Law 9 §10 per-client trust comparison and the trust reconciliation for the account.
Reversals unwind in the correct order (reallocation → receipt) so the trust ledger and general ledger stay consistent at every step.

The trust-servicing behaviour described here is grounded in the Law Society of Ontario By-Law 9 (financial transactions and records). See the authority: LSO By-Law 9 on CanLII and Athenty’s Trust accounting documentation. Trust-related outputs remain subject to your own professional review.

Verification & validation

Athenty’s amortization engine is validated cent-for-cent against an extensive reference set of loan scenarios spanning the compounding × day-count × payment-frequency matrix, with regression tests over every schedule row so the results cannot silently drift between releases.

That said — see the caution at the top of this page — the conventions you select must match your loan’s governing documents. Where a value depends on a convention with more than one accepted definition (most notably “continuous” compounding), Athenty exposes the choice rather than deciding for you, and discloses the formula here so you can verify it.

When the Loan Management tab is enabled on a matter, you can give a client a read-only view of it in the client portal. On the matter’s Clients sub-tab, open a client’s portal-access menu — under Add-on tabs you’ll see a Loan Management toggle (it appears only when the tab is enabled on this matter). Switching it on grants that client a read-only Loan Management view in their portal showing the loan summary, the full amortization schedule and the payout figures, with a PDF download of each. The grant is per client and takes effect on their next portal request; turning it off removes the view immediately.

The portal view is strictly read-only — clients cannot edit terms, recalc, record advances or draws, or add payments. Those remain staff-only here.

Troubleshooting

Symptom	Likely cause
Interest is higher/lower than the lender’s figure	Compounding method or day-count convention doesn’t match the loan document — compare both settings against the agreement.
”Continuous” doesn’t match another calculation	The other source may use the opposite continuous definition — try the other Continuous option (per-period vs compounded).
First period’s interest looks off	Check the interest-adjustment settings — an advance date ≠ interest-adjustment date adds a stub charge.
Schedule doesn’t amortize to exactly zero	Expected for interest-only / balloon payment types, where principal is due at maturity.
A missed payment made the final balloon grow	Expected — a missed payment capitalizes that period’s interest into the balance; the Term holds, so the unpaid interest rolls into the final payment.
A late payment added charges but its interest looks unchanged	By design — late fee and default-rate charges are added as separate Items; they never alter the per-period interest accrual.
A U.S.-Rule loan runs past its nominal payment count	Expected — deferred interest sits in the escrow balance and must be repaid before principal falls, so payoff terminates on a zero principal, not a fixed row count.
Interest looks different after an early payment that crosses a rate change	By design — early-credit days accrue at the rate in effect during them; a rate change does not forfeit or re-anchor them. See Early payments and rate boundaries.
Per-row interest attribution shifts on a late+early pair	See Conventions under review — late+early day-allocation timing is under review; the total interest is unaffected.
Payout is disabled on a paid row	The payment was marked paid outside trust, or hasn’t been received into trust yet. Only trust receipts can be paid out.
Lender’s principal & interest didn’t pay out	The lender is a firm client — same-matter reallocations post at receipt; cross-matter moves are deferred to the matter-transfer workflow. External lenders pay out by Form 9A.
Can’t un-mark a payment as paid	It was already paid out and the matter lacks the trust balance to absorb the reversal, or the receipt sits in a reconciled period — collect funds back or reverse in the next period.
Firm fees aren’t leaving trust on Payout	By design — the firm’s own charges leave trust only once invoiced, not through the loan payout split.