Is it possible to pay off the loan in advance? What does the Italian legislation say? If until some time ago the early repayment of the loan involved the payment of a penalty in favor of the bank or the lender, starting from 2 February 2017, the Law Decree n. 7 of 01/31/2007 known as Bersani bis, eliminated all sanctions and established maximum penalties that could not be exceeded by the loan contracts signed before that date. Further editorial at http://pegasus-one.org

Thanks to this regulatory provision, the borrower has the option to pay off his debt early, without incurring any penalty.

Mutual early repayment: partial or total?

The early repayment of the loan can be:

• partial : the borrower pays a part of the capital making the mortgage payment become “lighter”,
• total : the borrower pays all the residual capital to the credit institution, effectively settling his obligation towards the creditor institution.

Early repayment of loans: case studies

For the loan contracts stipulated before 2 February 2007, the maximum penalties were defined by the ABI and by the consumer associations: the borrower must request the credit institution to renegotiate the penalty, by presenting the request online or directly at the branch .

Also read: how early extinction works

Fixed rate mortgages

For fixed-rate loans stipulated from 1 January 2001, if the redemption takes place in the last two years, no penalty will be charged to the borrower.

If the repayment of the loan takes place in the first half of the amortization period, the penalty amounts to 1.90%, while to 1.50%, if it occurs in the second half.

Variable rate mortgages

For variable rate mortgages stipulated before 2 February 2007, if the early repayment occurs before the third last year of the contract expiration, the maximum penalty amounts to 0.50%.

The penalty is reduced to 0.20% if the termination takes place in the third last year, while there is no penalty if it occurs in the last two years.

Mixed rate mortgages

For mixed rate mortgages , if fixed rate amortization is in progress at the time of repayment of the loan, reference should be made to the criteria relating to this method.

Conversely, if variable rate amortization is underway at the time of early repayment of the loan, the limits applied to variable-rate loans are valid.

For more information on how to renegotiate a mortgage or to request a personalized Estimate , contact a Walter Mitty consultant who will be happy to satisfy your every request.