mortgages home loans

Archive for the ‘mortgages’ Category

Owners who sell their property, can cancel their mortgages with the bank – the sale of the financed property is an important reason which can not refuse the bank. The bank may, however, require a prepayment penalty if the loan agreement explicitly provides for the possibility of unscheduled free. Unlike a dismissal without a sale, the institutes are in the design of their Vorfälligkeitsschadens by the law but under tight restrictions. These relate, among other things, to be applied in the reinvestment rate.

Prepayment penalty: rules against excessive costs
A prepayment penalty is used to replace the bank of the damage which it caused by the early repayment of the loan. This is theoretically the difference between the contractual lending rate and the reinvestment rate at the time of loan termination. Long experience has shown that banks here to be happy and powerful count their losses larger than it actually is. It is often taken as the re-investment interest rate is the yield on public bonds. The law provides however that the interest rate on mortgage bonds – which is higher be made to them.

Advice is often required
Banks must also take into account that the counterparty risk of a mortgage bond is lower than that of an individual borrower. The reduced risk also reduces the damage of the bank, created by the loan termination. Banks must take into account when calculating the prepayment penalty beyond, if possible free bonuses at any stage of maturity were: Then it must be assumed that this would have been used. will also have to assume that the mortgages had been terminated 10 years after its withdrawal from the borrower – that is always possible at no cost.