S.L. 371.21 Art. 23Early repayment.

(1) A consumer shall have the right to discharge his obligations under an equity release financial product, in full or in part, before the agreed termination.

(2) If the consumer pays the credit before the agreed termination:

(a) the consumer shall be entitled to a reduction of the total cost of the credit, such reduction consisting of the interest and the costs for the remaining duration of the contract; and

(b) the creditor shall be entitled to a fair and objective compensation, where justified, for possible costs directly linked to the early repayment of the credit in accordance with the credit agreement and the information provided in regulation 22(1)(g) and (h), so long as the early repayment falls within a period for which the borrowing rate is fixed:

Provided that said compensation shall not exceed the financial loss of the creditor and that no sanction is imposed on the consumer:

Provided further that in calculating the level of compensation, consideration shall also be given to the impact of early repayment on administrative costs irrespective whether the borrowing rate is fixed or variable.

(3) In determining the compensation for possible costs directly linked to early repayment of credit referred to in sub-regulation (2)(b), a creditor shall apply the same calculations to all consumers irrespective of the reason why early repayment was effected.

(4) Without prejudice to sub-regulations (2) and (3), the competent authority may provide that the exercise of the right referred to in sub-regulation (1) is to be subject to certain conditions, which may include time limitations on the exercise of the right, a different treatment depending on the type of the borrowing rate or on the moment the consumer exercises the right, or restrictions with regard to the circumstances under which the right may be exercised.

(5) Where a consumer seeks to discharge his obligations under a credit agreement before the agreed termination of the credit agreement, the creditor shall provide the consumer without delay after receipt of the request, on paper or on another durable medium, with the information necessary to consider that option.

(6) The information referred to in sub-regulation (5) shall at least quantify the implications for the consumer of discharging his obligations before the agreed termination of the credit agreement and clearly set out any assumptions used:

Provided that any assumptions used shall be reasonable and justifiable.

(7) Termination of any equity release financial product due to the death of the consumer or to his/her move to long-term care shall, in no case, constitute an event of early termination and, consequently, shall not be subject to any early repayment charges.