There are many factors involved with obtaining a home loan, so it is wise to work with a professional who will explain the terms and options so you don’t face any surprises down the road. One of the things you need to know is whether the loans you are considering have pre-payment privileges and penalties as part of the mortgage terms. In a nutshell, pre-payment privileges have set terms regarding prepayment options that are allowed, with or without penalties assessed. Other lenders may not allow pre-payment at all, other than caused by the sale of the home. Understanding the pre-payment privileges and penalties involved with your mortgage and how they affect your financial goals in the years ahead is a step you shouldn’t skip.
Lenders who grant pre-payment privileges include terms related to the particular circumstances and ways you can make additional payments on your mortgage. They may allow lump sump payments up to a certain percentage of the original principal, an increase in regular payments or doing bi-weekly or weekly payments to accelerate the loan, or even doubling payments. There can also be penalties involved, such as an interest adjustment or fee. You should fully understand what the penalties are if you plan to prepay your mortgage without selling the property.
When you work with us at Centum Mortgage Store, Ltd., we are happy to explain further what pre-payment privileges and penalties are and guide you based on your long-term goals. We work with more than 20 lenders, so finding you a mortgage with the terms that suit your situation isn’t a problem. Contact us today to learn more.