Early Repayment Calculator
Calculate prepayment penalties and estimate your interest savings
What is early mortgage repayment?
Early repayment allows you to pay off all or part of your mortgage before the scheduled term. This can generate substantial interest savings, but typically involves paying prepayment penalties (IRA in French regulations).
Prepayment penalties are capped by French law: they cannot exceed the lower of these two amounts: 3% of the remaining principal or 6 months' interest on the repaid capital.
Advantages of Early Repayment
- Substantial interest savings
- Reduced loan duration
- Or reduced monthly payments
- Freed borrowing capacity
- Increased financial peace of mind
Points to Consider
- Prepayment penalties (IRA)
- Verify the profitability of the operation
- Maintain an emergency fund
- Compare with other investments
- Negotiate terms with your bank
Loan Type and Penalty Reductions
Depending on the type of mortgage, early repayment penalties (IRA) may be reduced or fully exempted:
- Primary residence mortgage: Automatic IRA exemption when selling the property (French Consumer Code Art. L313-48)
- PTZ/Eco-PTZ: Repayment without penalties allowed by the nature of the loan
- Bridge loan: Often without penalties contractually (check your contract)
Exemption Cases for Prepayment Penalties
French law provides several situations where penalties do not apply:
- Job relocation
- Involuntary termination of professional activity (layoff)
- Death of borrower or co-borrower
- Retirement
- Category 2 or 3 disability according to Social Security
- Sale of primary residence following job relocation
- Sale of primary residence following divorce or dissolution of civil union
- Sale of primary residence (if reinvestment under legal conditions)
- Unemployment - involuntary job loss (sometimes contractually provided)
Impact on Borrower Insurance
Reducing the duration of your loan also results in savings on the total cost of borrower insurance.
Insurance savings = Duration reduction (in months) × Monthly insurance cost:
Example: If you reduce the duration by 24 months and your insurance costs €50/month, you will save €1,200 on insurance.
Frequently Asked Questions
What are prepayment penalties (IRA)?
Prepayment penalties are fees that the bank may charge when you repay your loan before the scheduled term. They are regulated by French law and cannot exceed the minimum between 3% of the remaining principal and 6 months' interest on the repaid amount.
Can I make a partial early repayment?
Yes, you can make a partial repayment. You will then have the choice between reducing your monthly payments (constant duration) or reducing the loan duration (constant payments). Duration reduction generally generates more interest savings.
When is early repayment profitable?
Early repayment is generally profitable when interest savings exceed the cost of penalties. Our calculator indicates the profitability of the operation and provides a personalized recommendation.
Are there exemption cases for prepayment penalties?
Yes, French law provides penalty exemption in several cases: job relocation, involuntary termination of professional activity (layoff), death of borrower, retirement, category 2 or 3 disability, sale of primary residence following job relocation or divorce, and sometimes unemployment according to your contract. PTZ, Eco-PTZ, and often bridge loans are also exempt from penalties.
How are prepayment penalties calculated?
Penalties are calculated on the repaid amount and capped at the minimum between 3% of remaining principal and 6 months' interest. Our calculator automatically performs this calculation in compliance with French regulations.
Can I negotiate prepayment penalties with my bank?
Yes, penalties are negotiable. When taking out the loan, you can request a clause reducing or eliminating penalties. Some banks also agree to reduce them during the loan period, especially if you keep other products with them.
Can the bank refuse my early repayment?
For a full repayment, the bank cannot refuse. However, for a partial repayment, Article L313-46 of the French Consumer Code allows the bank to refuse if the amount is less than 10% of the original loan amount. This rule does not apply to the final loan balance.
What is the difference between reducing duration and reducing payments?
Reducing the duration keeps your monthly payments the same but shortens the repayment period: you pay less interest overall. Reducing monthly payments keeps the same duration but lowers your monthly charge. As a rule, reducing duration is more financially advantageous because you reduce the total interest cost more significantly.
What is the impact on borrower insurance?
An early repayment can reduce the cost of your borrower insurance. If you reduce the duration, you save on premiums for the eliminated months. If your insurance is calculated on the remaining principal, the capital reduction also lowers your premiums. Since the Lemoine Law (2022), you can also switch your insurance at any time without fees.
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