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Are Prepayment Penalties Allowed on DSCR Loans in Connecticut?
#1 Private Lending & Conventional Mortgage Advice Contributor
- Lender
- Austin, TX
Prepayment Penalty Rules for DSCR Loans in Connecticut
Prepayment Penalties are Fully Allowed with no restrictions for DSCR Loans in Connecticut. Connecticut law prohibits prepayment penalties only on consumer-purpose residential mortgage loans, not on business-purpose financing. Since DSCR Loans are made strictly for investment (business) purposes, they fall outside the scope of Conn. Gen. Stat. § 36a-746e, which only levies restrictions on mortgage loans for owner-occupied properties. As such, 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 Nutmeg State.
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