Pre-payment Penalty

Importance: 0.57

Is a company: no

Is a proper noun: no

Synonyms

  • early payment penalty
  • mortgage pre-payment charge
  • mortgage pre-payment penalty
  • pre-payment charge

Alternate Spellings

  • Pre-payment Penalty

Definition of Pre-payment Penalty

  1. A fee or cost charged to the borrower for paying off the loan before the end of the term.

Related Terms and Acronyms

  • Interest Rate Differential (IRD) Acronym, Very Important,
    • The penalty one pays for breaking a mortgage.
  • Pre-payment Definition,
    • Applying additional payments towards the balance of a mortgage loan.
  • 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.
  • Blended Rate Mortgage Definition, Important,
    • If a homeowner renews his or her mortgage early, the old and the new mortgage rates are blended together to split the difference between the interest rates.
  • Lump Sum Payment Definition,
    • One-time single-sum payment or payout.
    • An extra payment made to reduce a loan.
  • 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.
  • Down Payment Definition,
    • The portion of the purchase price a buyer pays, in cash, at the time the loan originates.
  • 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.
  • 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.
  • Penalty Definition,
    • In mortgage terms, a penalty is a set rate or length of time the penalty will be charged based on the remaining loan amount. The penalty is usually three months interest or interest rate differential.
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