Penalty clauses view

Referring to a letter by MS Daniels in the June De Rebus regarding penalty clauses in home loan agreements, he notes that the National Credit Act 34 of 2005 differentiates between the charging of a settlement fee when ending a bond, and ending other agreements. A mortgage bond is a "large agreement" credit agreement irrespective of the amount it secures(s 9(4)) therefore it would seem as though bondholders, mainly the banks, will always be entitled to an early settlement charge as provided for by s 125, where there is early settlement of the debt by a consumer. Section 125 however provides the consumer with protection regarding the charging of excessive interest and excessive early termination charges.

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