Understanding Interest Calculation on Annual Maintenance & Water Dues for Greenwoods Society Members

At Greenwoods Society, we aim to maintain transparency in how dues and interest are calculated. Below is a clear explanation of how interest is applied to unpaid dues for Annual Maintenance and Water.

1. Interest Rate and Calculation Method

Interest is charged at a simple interest rate of 18% per annum, calculated daily. This interest is not compounded and only applies to the outstanding principal amount.

2. When Interest is Applied

Members are expected to clear their dues by 1 May of the current fiscal year. If a member fails to make the payment by this date, interest at 18% will be applied on a daily basis starting from 1 May until the payment is made or until the fiscal year ends, whichever comes first.

3. Interest on Principal Only

The interest is only charged on the principal amount. This includes both the principal carried forward from previous fiscal years (if any) and the principal for the current fiscal year.

4. Opening Principal and Interest

If a member has an outstanding principal balance from the previous year, interest will begin to accrue from 1 April of the new fiscal year. This interest will continue until either the due amount is paid or the end of the fiscal year, whichever is earlier.

5. Total Interest Calculation

The total interest to be paid by a member consists of:

  • Opening Interest: Any interest accrued on the carried forward principal from the previous year.
  • Interest on Opening Principal: Interest accrued on the principal carried forward from previous years, starting from 1 April.
  • Interest on Current Year Principal: Interest on the principal dues for the current fiscal year, starting from 1 May if not paid by then.

6. Total Principal Calculation

The total principal includes:

  • Opening Principal: The outstanding principal carried forward from the previous year.
  • Current Year Principal: The principal dues for the current fiscal year.

7. Order of Payment Settlement

When a member makes a payment, the settlement order is as follows:

  • Opening Interest: The payment first clears any interest accrued from the previous fiscal year.
  • Interest on Opening Principal & Current Year Dues: Once the opening interest is settled, the payment will be applied to the interest accrued on the opening principal (from 1 April) as well as the interest on the current year’s principal dues (from 1 May).
  • Opening Principal: Once the interest is cleared, the payment goes towards clearing the principal carried forward from previous years
  • Current Year Principal: Finally, any remaining payment is applied to the current year's principal dues.

This order of adjustment ensures that interest liabilities are addressed first, followed by the oldest outstanding principal.

By understanding this process, members can better manage their payments and avoid unnecessary interest accumulation. For any questions or clarifications, feel free to contact our RWA office.