prepayment penalty

prepayment penalty
A fee imposed on a borrower who pays off a loan (usually a mortgage) before its due date. Lenders impose this kind of fee to encourage borrowers to hold a debt — and keep paying interest on it — for the whole term of the loan.
Category: Bankruptcy, Foreclosure & Debt
Category: Personal Finance & Retirement
Category: Real Estate & Rental Property → Selling a House

Nolo’s Plain-English Law Dictionary. . 2009.

prepayment penalty

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • Prepayment Penalty — A clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty will be assessed. The penalty is usually based on percentage of the remaining mortgage balance or a certain number of months worth of… …   Investment dictionary

  • prepayment penalty — A fee that must be paid to the lender if the borrower prepays a loan within a defined time period. Many consumer loans, especially residential mortgage loans, do not have prepayment penalties. American Banker Glossary A fee a borrower pays a… …   Financial and business terms

  • prepayment penalty — Fin a charge that may be levied against somebody who makes a payment before its due date. The penalty compensates the lender or seller for potential lost interest …   The ultimate business dictionary

  • prepayment penalty — /pri: peɪmənt ˌpen(ə)lti/ noun US a charge levied on someone who repays a loan (such as a mortgage) before it is due …   Dictionary of banking and finance

  • Prepayment — is early repayment of a loan by a borrower. In the case of a mortgage backed security (MBS), prepayment is perceived as a risk, because mortgage debts are often paid off early in order to incur lower total interest payments through cheaper… …   Wikipedia

  • prepayment premium — USA Also known as make whole penalty or prepayment penalty. A penalty assessed against a borrower who elects to pay off a debt before its maturity date. This amount can potentially be quite significant. Practical Law Dictionary. Glossary of UK,… …   Law dictionary

  • prepayment — Payment of debt obligation or expense before it is due @ prepayment clause Provision in mortgage or note giving borrower right to pay off the indebtedness before it becomes due. See also prepayment penalty @ prepayment penalty A penalty under a… …   Black's law dictionary

  • Prepayment Privilege — The right given to a debt holder to pay all or part of a debt prior to its maturity or ahead of schedule, usually without risk of penalty. Prepayment privileges are often elements of such debts as mortgages or automobile loans. They are in… …   Investment dictionary

  • prepayment risk — The risk associated with early payments of obligations. A prime example is the risk that a borrower will repay a fixed rate mortgage early at a time when interest rates are falling, leaving the lender with a lower interest income than anticipated …   Big dictionary of business and management

  • penalty mail — Official mail sent without postage prepayment by officers of the executive and judicial branches of the U.S. government, by departments and agencies of the U.S. Government, and by specifically authorized individuals. Agencies then reimburse the… …   Glossary of postal terms

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