Any one saw this term before?

maydledoodle

Hoping to pay a secured interest only loan off 4 yrs early. in Early Repayment Section I see the following, the usual terms plus

AN AMOUNT EQUAL TO INTEREST ON THE PRINCIPAL SUM REPAID EARLY AT PREVIOUS RATE PER ANNUM FOR THE PERIOD FROM THE DATE OF THE EARLY REPAYMENT TO THE DATE THAT THE REPAYMENT OF THAT SUM WOULD OTHERWISE BE DUE.
Does this mean I am tied to paying the interest for the next 4 yrs whether I pay early or not? Yes I know I did sign it!!!!

Rafter

I'd agree with your interpretation.

The issue is whether that is fair, and that might depend when you took the loan out - given you have only 4 years left, it may have been before the rules were changed to introduce maximum repayment penalties - not sure if that applied to secured loans though.

Best thing to do is to call them and find out whether they will enforce that clause or whether they are so desperate for money they will do a deal!

R.