Pre-payment

Importance: 0.57

Is a company: no

Is a proper noun: no

Synonyms

  • accelerated mortgage payments
  • extra mortgage payments
  • pre-payments
  • mortgage pre-payments
  • additional mortgage payments

Alternate Spellings

  • Pre-payment

Definition of Pre-payment

  1. Paying on the balance of a loan before it is due. Mortgage prepayments decrease the total amount of interest paid over the life of the mortgage. Penalties may or may not apply.

Related Terms and Acronyms

  • Interest Rate Differential (IRD) Acronym, Very Important,
    • The penalty one pays for breaking a mortgage.
  • Pre-payment Clause Definition,
    • A clause that stipulates the amount of principal a borrower may prepay ahead of schedule without penalty as well as the prepayment penalty for larger prepayments.
  • Closed Mortgage Definition, Important,
    • Closed mortgages involve a strict repayment schedule of a specific amount with optional limited lump sum payments and payment increases.
  • Mortgage (mtg) Abbreviation, Important,
    • A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
  • Lump Sum Payment Definition,
    • One-time single-sum payment or payout.
    • An extra payment made to reduce a loan.
  • Amortization Definition,
    • Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.
  • Mortgage Payment Definition, Important,
    • A periodic payment used to pay off a mortgage's principal and interest.
  • Down Payment Definition,
    • The portion of the purchase price a buyer pays, in cash, at the time the loan originates.
  • Pre-payment Penalty Definition,
    • A lender's charge to the borrower for paying off the loan before the end of the term.
  • Additional Principal Payment Definition,
    • Extra money included with a loan payment to pay off the amount owed faster. Over time, this practice reduces the amount of interest paid.
  • Balloon Loan Definition,
    • A loan in which the payments aren't set up to repay the loan in full by the end of the term. At the end comes the balloon payment -- one that is larger than the other, periodic payments and pays off the remaining principal.
  • Biweekly Accelerated Payment Definition,
    • A mortgage that schedules payments every two weeks instead of the standard monthly payment. The 26 biweekly payments are each equal to one-half of the monthly payment. The result for the borrower is a substantial reduction in interest payments because the mortgage is paid off sooner.
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