A fee or charge imposed by a lender if a borrower breaks the terms of their mortgage agreement. This penalty is typically levied when a borrower pays off their mortgage early, refinances their loan, or makes additional payments exceeding the allowable limit specified in the mortgage contract. Mortgage penalties are designed to compensate lenders for potential financial losses incurred due to the borrower’s early repayment or contract breach. The specific calculation and amount of the penalty can vary depending on the terms and conditions outlined in the mortgage agreement.
