ABN AMRO’s reaction to news about penalty interest
ABN AMRO does not seek to profit from clients who make extra payments on or who repay their mortgages before the end of their term. We only charge the interest that the bank would otherwise have been paid if the client had not redeemed the loan sooner than agreed. This is commonly referred to as ‘penalty interest’. More information on early repayment of mortgage loans is available at this ABN AMRO website (in Dutch only).
Under certain circumstances, and certainly with interest rates as low as they are now, it could be beneficial for clients – despite the penalty interest charged – to opt out of their current interest rate contract with the bank and take out a new contract. In this case, the client can choose between a lump-sum ‘penalty’ or interest rate averaging. If an ABN AMRO client wants to repay their mortgage early, thus incurring penalty interest, the bank will always provide a final invoice with a transparent calculation for each separate part of the loan. The conditions and calculation method are available on the ABN AMRO website. Click here to see a sample calculation.