For a fixed rate loan, the prepayment penalty calculator determines the approximate amount of a potential prepayment penalty. Early repayment is only possible if your property is sold. With these calculators, you receive a guideline, which you can add as a seller of a property for sale price. You can use our prepayment penalty calculator to determine a benchmark for the amount of the prepayment penalty. Loan prematurely cancel premature repayment penalty will be cheaper.
Advance payment calculator determines the interest in case of an early loan repayment.
The fact that a borrower replaces his mortgage prematurely has many reasons: A surprising inheritance has washed up funds in the household, a change is imminent or another home bank provides a cheap loan amount. If a loan is terminated early, no fixed interest is required for the remaining term of the loan.
To compensate for this loss of interest, banks calculate a so-called early repayment penalty for fixed-interest loans – a form of “penalty payment” that allows you to withdraw from the Bauspar contract earlier than planned. A change to a lender with better conditions may pay off despite penalties if the sum of the so-called early-term interest payments – ie the prepayment amount – is compensated or even exceeded by the expected interest savings.
You can set an orientation value for the sum of the early cancellation fees with our early cancellation calculator. The target results from the remaining debt, the remaining fixed interest rate, the installment amount, a possible unscheduled repayment and the contractual debit interest. The amount of the remuneration is essentially based on the target interest rate at which the Bank can reinvest the terminated construction loan.
And how does the house bank calculate the compensation?
Legislators have approved two procedures to calculate the early repayment of interest: In the asset-asset method, the principal bank assumes that the repaid loan is immediately passed on to a new borrower. It is possible that the principal bank will have to grant more favorable terms to the new borrower on the basis of the current interest rate and ultimately suffer a loss.
However, in the case of the asset-liability procedure, the principal bank assumes that it will invest the capital in Pfandbriefe or securities in order to absorb the interest loss. Depending on the method of calculation used by the house bank for compensation, it compares the expected return on the conversion or investment in securities with the interest it would have received on continuing the loan.
The difference results in the form of early repayment of interest. You can use the Prepayment Compensation Calculator tool to calculate whether early repayment of a loan makes financial sense, but the invoice only gives you an indication of the amount of the settlement payment. The participating banks calculate exactly – but they charge for a fee of up to 250 $.
In the case of premature termination of the mortgage contract, the principal bank does not always have the right to demand compensation from the borrower for the early repayment. There are several ways to avoid prepayment penalties: Who owns and realizes real estate and can persuade the buyer to also take over his mortgages does not have to make any prepayments. This rule must be applied whenever the creditworthiness of the new borrower is recognized by the principal bank and the previous conditions of building cost financing are met.
Some borrowers are trying to talk directly to their bank about how to get out of the mortgage. By repaying the loan, the principal bank incurs no interest losses in this case, but can distribute or save the repaid amount more profitably, depending on the amount of the interest. At low or falling interest rates, however, the basis for negotiations for the debtors is poor.
Is the amount of the prepayment penalty justified? If the above does not apply to you and you still wish to terminate your property loan without paying in advance, you should consider the following notes from our checklist: You can only determine if the determination of early repayment is correct if you are beyond the bank’s tax base feature.
The amount of the early repayment is usually lower if you arrange an extraordinary amortization or a correction of the repayment rate at the time of amortization. Check with your house bank to what extent these provisions have been taken into account in determining the early repayment. According to the Federal Supreme Court ruling of 19 January 2016 (Case 169/14), credit institutions must take into account the agreed extraordinary repayments when determining default interest.
The creditworthiness of a debtor is lower, the greater the risk of default and the associated expenses. In the case of credit risks, BayernLB determines a risk premium when entering into a contract. The credit risk expires, however, with the repayment of the loan. However, because the premium was included in the calculation of the early repayment for the whole life of the loan, the principal bank must take into account the risk provisioning in the determination of the early repayment.
There is no fixed basis for the sum of these savings.
In addition, the administrative costs incurred by the early repayment of the loan are reimbursed in the range of approximately 25 to 50 dollars per year. From the interest loss of the house bank the saved risks and administrative costs are kept by the computer of the early repayment. Your credit institution may not arbitrarily specify the amount of the early repayment.
In the opinion of the Federal Court of Justice, he must compare in the determination of the preferred repayment penalty, the interest due to the early repayment of interest payments with the reinvestment of the money. In addition, the calculation must be based on the current interest rate level of the Deutsche Bundesbank’s Pfandbriefe. However, the interest rates may reverse between the date of the invoice and the date on which you actually transfer the balance to your bank.
If this is the case, the prepayment penalty is updated by the National Bank. Under certain circumstances, the expenses for early repayment may be deducted in the sales tax return as sales costs for leased property.