What factors influence the foreclosure amount on a mortgage?

The key factors that determine the foreclosure amount payable to close a mortgage loan early are:

• Outstanding Loan Balance: The remaining principal amount that is yet to be paid forms the base of the foreclosure amount.
• Interest Accrued: Interest on the loan, up until the foreclosure date, is added to the foreclosure amount.
• Prepayment Penalties: Some lenders may charge a penalty for closing the loan before the agreed term. This penalty varies depending on the lender's terms
• Foreclosure Charges: Certain lenders may apply administrative or processing fees for handling the foreclosure.
• EMI Dues: Any unpaid or overdue EMIs (Equated Monthly Instalments) at the time of foreclosure are factored into the final amount.
• Loan Type and Tenure: The structure of the loan and its duration may influence how the foreclosure amount is calculated, with shorter-term loans often having lower penalties.
• Interest Rate Type: Whether the loan has a fixed or floating interest rate may affect the foreclosure cost, as floating-rate loans sometimes have fewer foreclosure charges.

Understanding these factors will help in estimating the amount to be paid when opting to foreclose a loan.
Borrowers must review their amortisation schedule and use a Loan Foreclosure Calculator to determine the precise foreclosure amount.