Forward Renewal
When the date of renewal falls before the end date of condition fixing, this is referred to as “forward renewal”. The manual renewal order is executed but condition fixing or the inpayment agreement are created starting from the end date of previous period(s). Forward renewal is the most common form of manual renewal.
Example
Consider the following loan contract:
Loan contract details |
Date(s) |
Current condition fixing period: |
Jan 1, 2007 to Jan 1, 2008 |
Individual condition 1: |
Jan 1, 2007 to 30.10.2007 |
Individual condition 2: |
Jan 1, 2007 to Jan 1, 2008 |
Individual condition 3: |
Feb 1, 2008 to Feb 1, 2009 |
Individual condition 4: |
Dec 1, 2007 to Jan 1, 2009 |
Date of renewal: |
Oct 30, 2007 |
New condition fixing period: |
Jan 1, 2008 to Jan 1, 2009 |
During forward renewal, all individual conditions that are valid on the start date of the new condition fixing period, that is, on Jan 1, 2008, are proposed for inclusion in the new condition fixing. Therefore, only individual conditions 2 and 4 are proposed at renewal. Individual condition 1, which ends before the start date of the new condition fixing period, is not proposed at renewal. Individual condition 3, which is valid after the start date of the new condition fixing period, is deleted.
The following figure illustrates forward renewal:
