Question about prepayment penalty

Hello,

the following assumption:

Loan amount: €200,000
effective interest rate: 2.82%
monthly rate: €1,086
term + duration of fixed interest rate: 20 years (full repayment)
special repayment: 5% p.a. possible
repayment change: possible 2 times
start: 01.09.2014

Suppose someone makes a first special repayment of €10,000 after 12 months. This shortens the loan term (e.g. 31.05.2033 instead of 30.09.2034).

a)
Is a prepayment penalty due as a result?

b)
How is it calculated? Do you consider the new due date (31.05.2033), when the loan will now end, and calculate 1% of the remaining debt that would still have existed according to the repayment plan at that time?
E.g. €17,255 = €172?

c)
If I were to make another special repayment of €10,000 after a further 12 months, the term would be shortened again (now ending on 31.03.2032). Is the 1% calculation based on the remaining debt of the original repayment plan at the time the loan contract was concluded, or on the remaining debt of the new repayment plan (due to the previous special repayment)?

Or am I completely off track?

Regards,
Volkmann

Hello,

a) No prepayment penalty for contractually agreed special repayments. These are included in your terms.

b) & c) You pay the same installment for the entire fixed interest period (except in the case of repayment changes). Special repayments increase the repayment portion and decrease the interest portion. However, the absolute installment amount remains the same.

Regards,

Dirk

a) Does this incur a prepayment penalty?

No.

Or am I completely off the mark?

Yes. ;) Best regards Dirk Grafe

Great! So I can always make a 5% special repayment without having to worry about the loan term reduction or prepayment penalty. (....now I'm taking the other steamer. :-) ).

Is the same true if I change the repayment by increasing the installment? Then I will finish faster and won’t have to pay a prepayment penalty?

That's how it is.

Now you've caught the right steamer! :)

Prepayment penalty only if you go to the bank after a lottery win and want to repay everything at once or, for example, 100,000 in a single payment