Mortgage Prepayment Penalty

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Prepayment is the early repayment of a loan by a borrower, in part or in full, often as a result of optional refinancing to take advantage of lower interest rates.. In the case of a mortgage-backed security (MBS), prepayment is perceived as a financial risk-sometimes known as "call risk"-because mortgage loans are often paid off early in order to incur lower interest payments through.

The amount of any prepayment penalty is established by a clause in the loan documentation and is generally enforceable. Most mortgage lenders will enforce a prepayment penalty clause when a borrower.

A prepayment penalty is a fee that your lender may charge if: you make more than the allowed additional payments toward your mortgage you break your mortgage contract Your lenders may call the prepayment penalty a prepayment charge or breakage cost.

Prepayment penalties are a part of many mortgage contracts that make it expensive to refinance into a new home loan. If your mortgage contract includes a prepayment penalty, you may have to pay your original lender thousands in additional fees as part of any future refinance.

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Mortgage Prepayment Calculator. Use our mortgage prepayment calculator to help estimate your prepayment charge if you’re thinking about refinancing, early renewing or making mortgage prepayments when you have a (fixed or variable) closed mortgage or a Homeowner Readiline (installment).

2. If I break the mortgage and stay with you, will you forgive a percentage of my penalty or apply unused prepayment privileges, to reduce my penalty? The logic: More lenders are doing this as.

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By signing a mortgage contract containing a prepayment penalty clause, the borrower is agreeing to a charge the lender will make when a mortgage is repaid .