You would think that someone who has lent you money to buy a home (or other real-estate), would want their monies returned sooner rather than later or that you would have the right to pay-down all or part of a mortgage (above and beyond the monthly installment payment).
However, as far as the law is concerned, if loan documents are silent on that issue, a mortgage may not be prepaid.
By way of example, in Friends Realty Associates, LLC v. Wells Fargo Bank , Friends sought to prepay a mortgage but the lender, Wells Fargo Bank, sought a prepayment penalty. When Friends filed a lawsuit, the New York County Supreme Court sided with the bank.
On appeal, the Appellate Division, First Department, affirmed. Citing a quote from a 1987 appellate decision, the AD1 noted as follows:
"It has been settled law since the early 19th century that a mortgagor has no right to pay off his obligation prior to its stated maturity date in the absence of a prepayment clause in the mortgage or contrary statutory authority" ... Because the note here is silent as to prepayment during the sixth loan year, the court did not err in its interpretation that plaintiff/mortgagor did not have an unambiguous right to prepay without penalty.
So much for friends!
For a copy of the Appellate Division's decision, please use this link: Friends Realty Associates, LLC v. Wells Fargo Bank