Are you aware of refinance ?
Refinance is a great thing, it enables the borrower to make payment for the existing mortgage prematurely. The reason for the use of refinance differs from person to person. The reason can be anything like changing the type or category of mortgage that has been taken previously, changing terms of repayment and extending the term of repayment of the mortgage. What makes premature settlement different from refinance is that the borrower is not obligated to make use of their personal resources to make the balance payment. In case of refinance it is the second mortgage lender that makes the repayment. Now let me explain you the concept with the help of an example, the second mortgage lender will calculate the original outstanding mortgage repayment along with the interest on it. As per the policy of the first mortgage lender an early repayment would attract either a penalty or rebate. The sum total of all these amounts would qualify to be the new mortgage