Legal Question in Real Estate Law in California
pre-payment penalties
Whatisthemaximum amount of years in a pre-payment mortgageloan payment? 5years?
Asked on 12/17/02, 8:22 pm
1 Answer from Attorneys
Bryan Whipple
Bryan R. R. Whipple, Attorney at Law
Re: pre-payment penalties
Since 1/1/76 principal and interest on a loan for a single family owner-occupied property can be prepaid. A penalty is permissible if the prepayment is within five years, or seven years if a loan broker was responsible for the loan. The penalty cannot exceed six months interest.
Further, up to 20% of such a loan is exempt; only the prepayment in excess of 20% of the original principal is subject to penalty.
So, the answer can be five or seven, depending upon whether a loan broker was used.
Answered on 12/18/02, 2:35 pm