Do most mortgages have a prepayment penalty?

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asked Jun 6 in Real Estate - Renting by Evoy (410 points)
Do most mortgages have a prepayment penalty?

1 Answer

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answered Jun 6 by lulumeon (5,480 points)
Most mortgages will have a prepayment penalty when you decide to pay off your mortgage early.

Most lenders allow someone to pay up to 20 percent off their loan balance each year without a penalty.

The penalty charge that the bank may charge you for paying off your mortgage early can depend on how much you owe on your mortgage and the loan amount of the mortgage.

Lenders make their money on the interest charged over the years of the loan so they don't want you to pay back the loan before the terms are up so they charge you a fee for paying off the mortgage or loan early.

Although you may be charged a prepay penalty for paying off your mortgage earlier than the 15 or 30 year mortgage term you can save up to $30,000.00 or even more in interest charges if you can get your mortgage paid off sooner.

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