From 1 January 2026, lenders cannot levy prepayment or foreclosure charges on floating-rate loans granted to individuals for purposes other than business. There is no lock-in period and it applies regardless of where the repayment money comes from. Fixed-rate loans are not covered.
The scope is specific, and the specifics are what decide whether it applies to you.
The gaps matter as much as the coverage, and this is where most confusion sits.
This provision gets less attention than the ban itself and is arguably more useful day to day.
The rule lowers the cost of leaving a badly priced loan, which changes the arithmetic for a lot of borrowers.
Only if it is a floating-rate loan sanctioned or renewed on or after 1 January 2026. Loans sanctioned before that date are not covered unless they have been renewed since, and fixed-rate loans are not covered at all.
On a fixed-rate loan, yes. On a covered floating-rate loan, no. And in every case, a charge that was not disclosed in your sanction letter, loan agreement or Key Facts Statement cannot be collected - so ask to be shown where it appears.
No. For covered loans the rule specifies no minimum lock-in, and it applies irrespective of the source of the funds used to repay.
The exit door on most floating-rate personal loans is now free. That does not automatically make switching right, but it removes the charge that used to make a marginal case not worth it.
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