Government Approves Law Change Allowing Banks to Charge Fees for Early Mortgage Repayment
The government recently approved a law change that will allow banks to charge up to two percent of the outstanding principal when clients repay their mortgages early or outside of the legal options. “Punishing” someone for repaying their debt, and even doing so in advance, may seem paradoxical at first glance, but upon closer examination, it becomes clear that this change could bring about cheaper mortgages across the market.
If the law is also approved by parliament and actually comes into effect, it will mark a return to the European norm. Domestic conditions have deviated from European customs in recent years. Ultimately, this will lead to more favorable mortgage conditions for both new and existing clients.
How might allowing banks to impose fees for early mortgage repayment or repayment outside of agreed terms result in cheaper mortgages?
The government has given its approval for a law amendment that would allow banks to impose fees of up to two percent of the outstanding principal when borrowers repay their mortgages ahead of schedule or outside of the agreed terms. While it may initially seem counterintuitive to penalize individuals for taking steps to pay off their debts early, a closer examination reveals that this change could result in cheaper mortgages across the market.
If the law is passed by parliament and implemented, it would bring domestic regulations in line with European standards, which have veered away from in recent years. Ultimately, this adjustment is expected to create more favorable mortgage conditions for both new and existing customers.
That’s ridiculous! Banks already make enough money off of us, why do they need to charge us even more?
This is just another way for banks to exploit their customers and make more profit. It’s unfair and unnecessary.