Negotiating down a 30k Pre-Payment Penalty?

1 Reply

All:

Has anybody had any luck negotiating down a pre-payment penalty? 

I currently have a seven figure note with a local bank and am currently required to pay a 3% pre-payment penalty if I refinance it with another bank. I'm looking for a way to get that reduced (I've tried to talk to the bank about re-financing the note with them, but there terms are much worse than I can get with a credit union). The problem is they currently have a favorable position (58% LTV), great debt service coverage (~2.1), and the amortization remaining is 12 years. In other words, they have no reason to give up the loan.

I will still have a fairly decent sized loan with them even if I take this one away, so there is still somewhat of a relationship there.

Any suggestions?  

Originally posted by @Will Gaston :

All:

Has anybody had any luck negotiating down a pre-payment penalty? 

I currently have a seven figure note with a local bank and am currently required to pay a 3% pre-payment penalty if I refinance it with another bank. I'm looking for a way to get that reduced (I've tried to talk to the bank about re-financing the note with them, but there terms are much worse than I can get with a credit union). The problem is they currently have a favorable position (58% LTV), great debt service coverage (~2.1), and the amortization remaining is 12 years. In other words, they have no reason to give up the loan.

I will still have a fairly decent sized loan with them even if I take this one away, so there is still somewhat of a relationship there.

Any suggestions?  

 if you were getting rent payments every month and when the person wanted to move they had to pay you a large lump sum, would you negotiate out of it? No

The time to negotiate is when you signed the contract.  

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