Understanding Early Loan Repayment
Early repayment allows you to pay off all or part of your mortgage before its term. It's an interesting strategy if you've received a lump sum (inheritance, bonus, sale of property) and want to reduce the total cost of your loan.
Early Repayment Penalties
Many loans include early repayment penalties. These vary by lender and loan type. Our simulator helps you estimate potential penalties based on common calculation methods.
Penalty = min(6 months interest, 3% of principal)
Two Options Available to You
Reduce Monthly Payment
You keep the same repayment period, but your monthly payment decreases. Ideal if you want to lighten your monthly budget.
Reduce Term
You keep the same monthly payment, but finish repaying sooner. This is the most economical option in the long run.
Frequently Asked Questions
It's particularly advantageous early in the loan, when the interest portion of your payments is high. The earlier you repay, the more you save on future interest.
Most loans allow early repayment, but may include penalties. Check your loan agreement for specific terms and conditions.
Full repayment completely pays off your loan (property sale, large inheritance). Partial repayment reduces the remaining balance and lets you choose between lowering your monthly payments or reducing the loan term.
It depends on your loan agreement and local laws. Some lenders waive penalties in certain situations (property sale, job loss, death). Recent regulations in some countries have limited or eliminated early repayment penalties. Check your loan contract for details.