Yes. In most cases, a borrower can avoid having a prepayment penalty on their loan. Unfortunately it may require some questioning and investigation. Remember, in theory, a loan with a prepayment penalty feature should provide the borrower with a lower interest rate. However, in reality, a loan with a prepayment penalty generally puts more money in the pockets of a lender or mortgage broker.

We believe that the more you know about prepayment penalties, the less likely it is that you will end up with a prepayment penalty. Think about it. If you’re talking to a lender or broker about a loan and you question the prepayment penalty feature, they will have to assume that you have some knowledge about this feature and therefore will be less likely to steer you there.

Here are a few questions for the lender or mortgage broker:

Back to Top