Source: Forbes —
Purchasing a real estate property through a mortgage is a substantial financial commitment and thus, the underlying terms and conditions should not be ignored. The property buying process includes contractual agreements that may indicate mortgage prepayment penalties. To share what I know from my role as CEO of a company based in the mortgage and financial industry, I’ve compiled my experience to better inform you on this aspect of mortgages.
What Is A Mortgage Prepayment Penalty?
When you buy a property with a loan from the bank or any other financial institution, the lender may impose a contractual clause that prevents you from paying off your mortgage earlier or faster. If you increase your mortgage payment or make a lump-sum prepayment outside of the agreement in your mortgage contract, you will be subject to a mortgage prepayment penalty.
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