No prepayment penalty on termination of the loan by the principal bank In the event of early termination of a loan agreement, eg because the borrower is in default of payment or his financial situation has worsened considerably, the credit institutions generally claim the non-settlement loss as a so-called overdue amount. The reason for this is that loans with a fixed interest over a certain period of time cause the principal bank a loss of interest due to prepayment.
In a house bank terminates a loan due to default of the borrower with early termination,
The outstanding loan proceeds are due and an early repayment penalty of up to the end of the fixed interest period is payable. It has long been controversial whether and to what extent the house bank was entitled to claim a prepayment penalty as damages.
Now the BGH has ended this legal dispute and in its decision of 18 February 2016 – II ZR 103/15 – decided that the assertion of an early repayment demanded as compensation for the interest in performance is no longer possible. The court has applied the provision of 497 (1) BGB in the new version of 11 May 2010 for the special termination of a consumer credit.
It is not apparent from the text of the provision whether the person in default is obliged to reimburse the resulting loss in addition to the default interest provided for in the provision. Therefore, the BGH has interpreted the provision in terms of its legal history and the background of its meaning and purpose.
The interpretation implies that an early repayment penalty may not be levied if the lender terminates the loan agreement.
This not only applies to consumer credit agreements, but also to real estate loan agreements, so it makes sense to check on a loan cancellation if an early repayment penalty should be levied by the house bank. In this case, it is always advisable to make a corresponding reservation when paying and then to reclaim the amount paid from the principal bank with appropriate professional and legal support.