Question
Pretermination of a home loan?
Is it right for a bank to actually add the gross receipt tax payable on the outstanding balance in your home loan if you are preterminating the loan and paying the remaining balance prior to the term date? There isn't any pretermination agreement signed though. What is gross tax receipt anyway when it comes to loans?
1 month ago - 2 answers
Best Answer
Chosen by Asker
Yes, most banks do this. A gross receipts tax is similar to a sales tax, but the bank is paying it instead of you. The bank is currently paying tax on your home (maybe not all of it depending on your loan, but definitely some of it). The bank charges you for this tax though your mortgage. If you pay off your loan early, the bank still has to pay the remainder of the tax. The only way they'll let you terminate your loan is if you agree to pay the tax upfront so they're not stuck with the bill.
by ☆skyblue
1 month ago
Asker's Rating: 
Other Answers
I never heard of a gross receipt tax for a loan, what state or country is that? Unless your loan has a prepayment penalty, your payoff amount is usually just your outstanding principal. At least that is how it was with my original mortgage and is with my refi in Illinois. There is no extra charge for paying extra principal or paying my loan off early.
by efflandt- 1 month ago