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Are Prepayment Penalties Allowed on DSCR Loans in Alabama?
#1 Private Lending & Conventional Mortgage Advice Contributor
- Lender
- Austin, TX
Prepayment Penalty Rules for DSCR Loans in Alabama
Prepayment Penalties are Fully Allowed with no restrictions for DSCR Loans in Alabama. Alabama law limits prepayment penalties only on transactions, not business-purpose loans. The state caps prepayment penalties on consumer credit at $100 under §5-19-4 — but this applies only to debt for personal, family, or household use. Since DSCR Loans are strictly utilized for business purposes, not consumer use, DSCR Lenders can typically offer all standard prepayment penalty options such as Descending Prepay Penalties (i.e. “3/2/1”), Flat Prepay (i.e. 5/5/5/5/5) or other tailored structures in the Yellowhammer State.
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