"penalty Period"), Borrower makes a full prepayment, or partial prepayment in any twelve (12)-month period that exceeds 20% of the original principal loan amount, Borrower will pay a prepayment charge as consideration for the Note Holder’s acceptance of such prepayment. The prepayment charge will equal
As another way to compensate for prepayment risk (which is a reinvestment risk), a prepayment penalty clause is often included in the loan contract. "Soft" prepayment terms can allow prepayment without penalty if the home is sold. "Hard" prepayment terms do not allow any exceptions without penalty.
Can I prepay my loan at any time without penalty? Whether you can pay off your auto loan early without a penalty depends on your contract and on your state’s law. If the lender wants to charge you a penalty or fee to pay off the loan early, the contract has to contain a prepayment penalty clause.
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As of Dec. 1, then, prepayment penalties are prohibited if a lender exercises a due-on-sale clause by written notice or fails to act within 30 days on a completed credit application from a qualified.
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Prepayment Penalty Clause – Real Estate – Prepayment Penalty Clause A prepayment penalty is a charge the borrower pays when a mortgage is repaid before a certain period of time elapses. Not all lenders impose a prepayment penalty.
A prepayment penalty clause is a provision in loan agreements under which the lender imposes a penalty when a borrower retires a loan before its scheduled pay off date. The purpose of these clauses is to compensate lenders for not obtaining interest income they anticipated, and for the possibility that the loan amount will have to be reinvested.
Definition of PREPAYMENT CLAUSE: A Clause in some loan agreements that allows borrowers to settle the loan amount before the end of the loan term and not incur any prepayment penalties. The Law Dictionary Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.
Prepayment penalty shall apply if the loan balance is prepaid in whole (100%) or in part (any prepayment of principal over the normal amortization.) In the example above, the borrower can make partial principal prepayments at any time, but the prepayment is subject to penalty.