Partial redemption penalties on French mortgages
A borrower can repay partially (or totally their mortgage before the end of the contract) but a fee is sometimes due.
The first thing to consider is the amount of your partial redemption as your mortgage contract may not allow an early repayment of an amount equal to or less than 10% of the initial loan amount (Except in the case of its complete payoff).
Then you can estimate the cost of the early redemption. Most mortgage contracts provide for the payment of compensation (redemption fee) to the lender if you repay your loan early.
This fee cannot exceed (Lesser of) :
- The amount of 6 months of interest on the principal repaid in advance
- Or 3% of the capital remaining due
Example: You wish to repay 10 000 EUR on a mortgage (initial amount of 250 000 EUR with a 15 years mortgage at 1.04% fixed rate). The fee is 24 000 EUR X 0.52% (half of the annual fixed rate of 1.04%) = 124.80 EUR
You may also have the option to voluntarily “modulate” your monthly repayment charge instead of paying off lump sum. There is no fee as you decide the amount you wish to overpay and the duration.
Example: You wish to add to your monthly repayment charge the sum of 1 000 EUR over 24 months. 24 000 EUR will be deducted of the capital due of the mortgage without a fee.
Please note that a fee is not due to the lender in case of total repayment of your loan justified by:
- The sale of the home following your change of place of work or that of the person whom you live with as a couple
- The forced cessation of your professional activity (dismissal in particular) or that of the person whom you live with as a couple
- Death (your own or that of the person whom you live with as a couple)
To consider an early partial redemption, you must send a written request to the lender. Upon reception of your request, the lender must provide you free of charge and without delay, on paper or on another durable medium (Internet account), the information allowing you to assess the consequences of the requested early repayment (payment of a fee, …). The document must also indicate clearly all the assumptions used for the calculations.
Current mortgage rates for August 2021
|Fixed rate(1)||Term||Monthly repayment
for 10 000€ borrowed
|1.25%||10 years / 120 months||88.69€|
|1.30%||15 years / 180 months||61.18€|
|1.60%||20 years / 240 months||48.72€|
|2.05%||25 years / 300 months||42.63€|
(1) The indicated rates are given for information purposes and are based on the latest bank rates of one or more of our partners. The rates in the table above do not include the ancillary cost as notary fees, guarantees, insurance and intermediation.
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