Do Hard Money loans have prepayment penalties?
Because Hard Money loans are often financed with private investor funds that require a guaranteed interest return period, prepayment penalties (sometimes called “interest guarantees”) are common. We typically have a 3-month to 6-month interest guarantee period for our Hard Money loans. For example, with a 6-month interest guarantee clause, if the borrower repays the loan in 3 months, there is a penalty of three months’ interest due when the loan is paid off. If the borrower repays the loan after six months, there is no prepayment penalty.
