In many mortgage loan agreements, the cancellation policy is incorrect or incorrect. For you as a consumer, this means that you can avoid the prepayment penalty or reclaim the prepayment penalty you have already paid.
The current case law offers various possibilities to gain the best from the regulations of a loan agreement and to be able to avoid a prepayment penalty. So far, banks have benefited from the fact that consumers have come to terms with the terms agreed at the time the contract was signed. If the loan contract was set at 5 years or 10 years, the repayment was normally made without objection. It is evidently not known to many creditors that a prepayment can be avoided.
In a nutshell: Information to avoid the prepayment for fast readers
- An erroneous formulation in the cancellation policy means that the borrower does not have to pay a prepayment penalty when he terminates his loan agreement.
- If you cancel the contract within the first 6 months after 10 years of the loan agreement, you do not have to pay a prepayment penalty.
- The cancellation of the loan agreement may also be requested if a loan increase has not been approved by the bank.
- When selling a property, no prepayment penalty will be payable if the buyer buys the loan. But even if the bank refuses a potential buyer, the early repayment penalty is canceled.
- If market interest rates have risen sharply during the contract period, the borrower can ask his bank to settle the remaining debt by making the money profitably. In this case, the borrower does not have to pay a prepayment penalty.
Avoid overdue payments: How to avoid paying the prepayment date for credit agreements
The experience with loan contracts concluded decades ago shows that consumers’ desire for early loan repayment is made by the lending bank in the form of a prepayment request. However, since a large number of revocation instructions turned out to be incorrect, the early repayment penalty should not be paid without prior review of the revocation instruction of the respective credit agreement. This is important so that you do not have to argue about the repayment after payment and the complaint due to a faulty cancellation policy in the contract. Persons who want to replace part or all of their loans by inheritance, salary increase or termination of a high installment or leasing payment should therefore have the loan contract checked by the specialist lawyer. This can determine whether the consumer can revoke his credit due to a faulty formulation in the contract.
Numerous cases from practice prove that a faulty cancellation policy in the loan agreement leads to the elimination of the early repayment regulation.
Thus it is very easy to circumvent the early maturity by revocation. The loan agreement can be replaced at any time, without banks being able to claim a penalty fee in the form of prepayment penalty. Borrowers who make positive, financial changes by donating money or by changing their job or position to a better position should have their loan agreement checked.
Some ways to get around a prepayment penalty
- Obtain the model templates of the revocation reimbursements from the legislator and compare the wording of the revocation instruction with your contract. If there is an error in the cancellation policy, you may be able to avoid the prepayment penalty
- Get in touch with the specialist lawyer and have your loan agreement checked for a correct cancellation policy of your bank, perhaps you can use it to avoid a prepayment penalty
- If your credit agreement has been in effect for 10 years, you do not need to review the revocation instructions; you can avoid the prepayment by terminating the loan agreement with your bank within the first six months after the beginning of the 10th year of the contract. In this special case, the bank’s claim for prepayment no longer applies
- Search the internet for cases where your bank is involved and check if borrowers in front of you have been able to avoid paying the early repayment penalty
A loan is no longer an indispensable size
Economic instability and uncertainty on the labor markets lead to a decreasing significance of a multi-year loan. Experience has shown that, for example, debt rescheduling or a loan increase requested by the borrower may result in the termination of the current loan agreement. Under German law, you have the right to increase a current loan. If you are denied this request by your lender, you can request a liquidation of the loan agreement. All that is required is an informal letter in which all the persons involved in the loan agreement have to sign. To ensure that the loan agreement can be found clearly, enter the loan number and the date of the loan completion in the letter. It is even easier if you enclose with the letter a copy of the concluded loan agreement.
The sale of a property that is encumbered with a loan
Every loan customer wishes to be able to avoid the prepayment penalty and not have to pay prepayment penalties. Especially when it’s about every penny anyway. The sale of a house burdened with a loan is demonstrably more difficult than a loan-free house. Because of the temporary co-ownership of the bank, banks have the opportunity here to also examine the sale of the property and decide on the buyer. The legislature states: If the bank rejects the potential buyer of the house, no prepayment is due. The influence of the lender at this point can be circumvented if borrower and prospective buyer agree to replace the loan with the purchase. Thus, the lender is removed from his role of decision and you have a free hand, who should ultimately receive your house. An alternative to this can be found in the following variant: If no buyer has yet found, premature repayment of the loan can speed up the sales process. In order to be able to avoid payment of the prepayment penalty in the sales situation, the revocation must be faulty, but if this is the case, you can avoid the prepayment penalty.
High interest rates on mortgage lending arouse the desire for a loan repayment
A lawyer is indispensable if you do not have the time, if you want to avoid the topic of loans, termination and early maturity, or if you want to work on prepayment. Review your existing funding and review the terms of the contract. Countless customers in front of you have already gone this route and instead of paying too high loan interest, they have invested their money more expediently. Because history shows that a loan agreement concluded years ago is nowhere near the good conditions that a loan has today. Do not stay on too high loan interest rates and do not be impressed by the pending prepayment penalty. Only examining your loan agreement will provide you with information about your options. In the best case, a prepayment penalty can be avoided, even if other conditions may not be optimizable. Use our prepayment penalty calculator to check for opportunities. You should also read more about rescheduling and follow- up financing, perhaps this is the right thing for you in your individual case.
High interest rate rise: Avoid prepayment penalty is possible
If loan interest rates have increased disproportionately since the loan was concluded, the lender can profitably invest the money still tied to the loan or spend it on a new loan. If the lender agrees to the loan cancellation, 100% of the prepayment date can be forfeited and you can avoid paying the prepayment date. There is then no prepayment penalty payable. In this situation, however, the lender does not have to comply with the lender’s wish. In order to be able to avoid the prepayment penalty in the situation, it can help to have a good lender-borrower relationship. Furthermore, it is positive if you offer the lender to conclude a new loan agreement immediately or in the future.
Never pay the early payment without having the billing checked by an expert
The payment of a prepayment can be bypassed in many cases. Even prematurely paid prepayment can be reclaimed. So you can also bypass the prepayment penalty later on.
To be able to avoid the prepayment, contact the specialist lawyer and have your loan agreement checked.
Ask the specialist lawyer or your insurance advisor for the costs you are charged for and whether the costs are covered by your legal expenses insurance. If the payment of a prepayment date can not be avoided, there is nevertheless a chance of discovering calculation errors in the prepayment penalty. Since the prepayment calculation is a process prescribed by the legislature down to the last detail, mistakes are almost the rule. It is therefore all the more important to know and hand over the contract together with the calculation of the prepayment date to the attorney. In advance, you can independently carry out the prepayment calculation with the aid of the easy-to-use prepayment penalty calculator. In order to avoid the prepayment penalty, you may be able to get more advice from a specialist solicitor. You should not pay prepayment penalties without having checked all options, because more often than you think you can avoid the prepayment penalty.