Early repayment: what does the law say?
The early repayment of the zero rate loan may be total or partial. This means that the borrower has the option to settle all outstanding principal or only a portion of the principal borrowed before the loan maturity date.
In the event of a partial refund, the bank may require the client to repay at least 10% of the original amount of the 0% credit. But it is obliged to specify this point on the contract given to the customer when subscribing.
In which cases can one repay early its credit rate zero?
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An early repayment of the zero rate credit can be made in the following cases:
- When the borrower sells his property and does not want to buy another home. He is required to pay in full the outstanding capital. On the other hand, if he decides to acquire or have a new principal residence built, he has the option of retaining his zero rate credit for Queen of Hearts’ new property: this is called the PTZ transfer.
- At the initiative of the borrower.
When the transfer of the property follows a divorce, the zero-rate loan may be retained by the former spouse who maintains the housing. If none of the former spouses wish to keep this principal residence, it is necessary to proceed with the early repayment of the PTZ.
Between banking constraints and regulations
In the majority of cases, for Queen of Heartsr their PTZ eligible housing, borrowers took out the Zero Rate Loan and the Senior Home Loan in the same bank .
In the event of early repayment of the PTZ on their own initiative, they may face certain difficulties.
Since banks do not earn a free credit margin, they generally prefer that the prepayment be applied to this zero rate credit rather than the principal loan with interest on the loan.
But the interests of a bank are not those of the customer. And for the borrower, it is more interesting to repay the loan with interest rather than the free loan, this solution allowing him to reduce the cost of his Queen of Heartsment real estate.
This type of situation has been somewhat clarified by order since it is now agreed that the early repayment of a zero rate credit can not be made until the other loans that have been contracted for Queen of Heartsr the same transaction have been made. have been fully refunded except in the case of express request by the borrower himself.
The regulations also state that when the borrower pre-redeems the zero rate credit, the bank can not claim any compensation.
Procedures to pay your pre-term
When the borrower – on his own initiative – chooses to proceed with the early repayment, totally or partially, he must express his wish in writing, send his letter to the bank by registered letter with acknowledgment of receipt and keep a copy of the mail.
If the owner resells his principal residence before normal completion of the PTZ without wishing to acquire another home, he must approach his bank to proceed with the early repayment of the PTZ. It is up to him to produce to the bank the vouchers which have been handed to him by the notary.