Question

Last year Jones obtained a mortgage loan for $ 100000. He just inherited a large sum of money and is contemplating prepaying the entire loan balance to save interest. What are his rights to prepay the loan?​

Answer 1

Jones only has the right to prepay the loan if there is a prepayment clause in the loan agreement that provides for early payment. Otherwise the lender has the right to collect the full amount of interest specified in the original loan agreement. Furthermore, if there is a prepayment clause, it may provide for a penalty if some or all of the loan is prepaid.