Let's say I want to prepay my entire mortgage and I have 22 years left in my 25 years mortgage.
In this case the bank imposes a penalty which is the yearly interest for three months. My question is, will this penalty apply on the entire 300,000$ mortgage let's say or the 60,000$ I would have paid in this 5 years cycle?
To put it in other words, the bank says that I need to do
prepaid_amount * yearly_interest / 4. So the
prepaid amount is the 60,000$ or the 300,000$?
division by 4 comes from the fact that I'm penalized with the
yearly_interest for three months.