Most
loans impose penalties on borrowers who
prepay in full or redeem the loan early,
say, within 5 years from the date of the
first drawdown of the loan (“the lock-in
period”). The penalty fee can be quite
substantial, depending on the attractiveness
of the Honeymoon Interest Rates and whether
or not the loan is a Zero Cost Package.
In
accessing the penalty fee, you should take
into account:-
1.
the lock-in period;
2.
the terms of the restriction placed on early
redemption, ie, no penalty fee will be
charged if you repay the loan from your own
internal funds or sell your property;
3.
the amount of the penalty fee, whether charged
at a flat fee or at a percentage of the
original loan amount or the outstanding loan
amount;
If the penalty fee is chargeable on the
outstanding loan amount, you should confirm
how much you may prepay the loan without
incurring any penalty before you prepay or
redeem the whole of the loan amount.
