Contact Us Licensee Login

Professional Standards Manual

Trading Services

4. General Information

(a) Contract Clauses - View Entire Section

(XVII) Financing Information - View Subsection
(12) Additional Mortgage/Agreement for Sale Clauses

Open (Prepayment in Part) Mortgage Clause

The principal balance may be paid at any time, in whole or in part, without notice, bonus, or penalty.

Open (Prepayment in Full) Mortgage Clause

The principal balance may be paid at any time, in full, without notice, bonus, or penalty.

Penalty (Prepayment in Part) Clause

The principal balance may be paid at any time, in whole or in part, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

Penalty (Prepayment in Full) Clause

The principal balance may be paid at any time, in full, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

Some lenders require an interest differential in lieu of or even in addition to a prepayment privilege commonly called a penalty. This amount is usually the loss of interest for the balance of the term. The licensee must confirm what is payable by a seller as it may affect his or her ability to clear title, pay a commission and/or buy again. A Mortgage Verification letter asking for details should be sent to the lender and kept on file for consultation during the offer presentation to ensure the seller’s status is protected.

A prepayment privilege is a designated amount of interest, usually three to six months, which is normally less onerous than the interest differential.