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Old 13.02.2015, 17:58
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Early Partial Repayment of a Fixed Mortgge

Hi,

Today I asked the bank to tell me the penalty fees for partially repaying one of my fixed mortgages early. Becasue I did not get an answer, I called them and they told me that there are not sure it is possible to partially repay a mortgage early and have contacted their treasury department for an answer.

I was wondering if anyone has ever attempted to do this?

Regards

Macer
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Old 13.02.2015, 18:02
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Re: Early Partial Repayment of a Fixed Mortgge

i suspect you would have to repay it all and take a new mortgage for the part you don't want to pay back.
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Old 14.02.2015, 09:47
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Re: Early Partial Repayment of a Fixed Mortgge

Yes, that was something I was hoping to avoid as it would increase the amount of the early payment penalty. But it makes sense.
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Old 14.02.2015, 10:08
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Re: Early Partial Repayment of a Fixed Mortgge

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Hi,

Today I asked the bank to tell me the penalty fees for partially repaying one of my fixed mortgages early. Becasue I did not get an answer, I called them and they told me that there are not sure it is possible to partially repay a mortgage early and have contacted their treasury department for an answer.

I was wondering if anyone has ever attempted to do this?

Regards

Macer
You take a fixed mortgage, the bank takes out a loan at same terms, with excception of interest rate which is lower for them than you, to cover the mortgage.

Penalities also apply to the bank if they wish to pay back the loan early
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Old 14.02.2015, 10:13
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Re: Early Partial Repayment of a Fixed Mortgge

They will probably tell you that there is a breakage fee (which can be quite high) as they themselves have committed to the interest rate for that period of time. Does your contract not allow for partial repayments? Mine gives me the possibility to repay yearly a certain percentage of the mortgage. There is a cost involved for doing that but it is overall cheaper to repay that part and pay less interest over the years.
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Old 15.02.2015, 17:36
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Re: Early Partial Repayment of a Fixed Mortgge

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You take a fixed mortgage, the bank takes out a loan at same terms, with excception of interest rate which is lower for them than you, to cover the mortgage.

Penalities also apply to the bank if they wish to pay back the loan early


Yes, I appreciate that. However, I was wondering if it was possible to repay 50% of the loan early, and I would be happy to repay the penalties on that 50%. I don't really want to have to pay the penalties as if I were repaying 100% of the loan. Strange that the bank doesn't know the answer and has to escalate the question to head office. If I can't do as I wish, I would have been better in hind sight to have taken two smaller mortgages with the bank.
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Old 15.02.2015, 17:42
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Re: Early Partial Repayment of a Fixed Mortgge

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They will probably tell you that there is a breakage fee (which can be quite high) as they themselves have committed to the interest rate for that period of time. Does your contract not allow for partial repayments? Mine gives me the possibility to repay yearly a certain percentage of the mortgage. There is a cost involved for doing that but it is overall cheaper to repay that part and pay less interest over the years.
No, nothing in the contract which permits early repayment. They have given the calcs for early repayment of the full amount. Basically, they took the rate of the loan and subtracted the rate I would get today on the shorter term and then multiplied this by the number of years outstanding. So, you would have thought that this algorithm could be applied to a partial repayment. Hopefully I will hear on Monday and I will let everyone know.
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Old 15.02.2015, 21:42
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Re: Early Partial Repayment of a Fixed Mortgge

It depends on the bank and the contractual terms......with mine, I can't 'get out' cheaper, I basically have committed to pay the interest on the capital for a period of time, so the 'get out' is to pay in a lump what I'd have paid anyway over time. I think that's quite common.
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Old 18.02.2015, 15:09
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Re: Early Partial Repayment of a Fixed Mortgge

Finally heard back from the bank. I'm amazed that it took a whole week to get an answer. At least the answer is positive, I am allowed to partially repay a fixed mortgage, and the early payment penalty will be just for the amount that is repaid. Thanks for all the good answers and feedback.
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