Too much penalty interest in early repayment of mortgage loan

Do you plan to repay your mortgage before the term has expired? Please note that you can then claim compensation for a penalty interest or, as it is currently called. Research by the Netherlands Authority for the Financial Markets (AFM) even shows that various mortgage lenders still collect too much money from consumers who want to redeem early.

In March last year AFM published principles for the calculation of the financial disadvantage, which affects consumers who want to redeem early. From an AFM survey, to the calculation methods that lenders used at that time, it appeared at the time that there were major differences between providers.


As a home owner you can consider, due to the low interest rates, to redeem your mortgage early or to close it. Because your mortgage is calculated at the start on a certain duration and with a certain interest rate, it may be that you have to pay a compensation (formerly called that penalty interest) to your mortgage provider. Since 14 July 2016, this compensation may not exceed the financial loss that providers have as a result. Providers must also clearly indicate how the compensation has been calculated. These are consequences of the new European regulations.

More information about the early repayment of your mortgage? We are happy to help you find more information by bringing you into contact with an independent mortgage advisor in your area.


Refund starting points

Because of these new rules AFM investigated the calculations of the fees. The basic principles that AFM formulated as a result of the investigation provide tools to be able to comply with the new rules. It also offers consumers a step-by-step plan and a checklist, so that they can see what they can pay attention to when they are faced with a payment with regard to the mortgage repaying or transferring early.


Nine of the fifteen surveyed providers have charged too high a fee in at least one file, the AFM concluded. Because these new regulations came into effect on July 14, 2016, all consumers who had paid too much penalty interest had to get their overpaid money back. At the beginning of this year it came out that this (partly) happened. Providers must quickly correct their mistakes and demonstrate that they have changed their calculation method. Furthermore, they have to show that the information on the bill is improved.

The banks are willing to look at how the information can be improved with the AFM.