What is The Definition of Prepayment Penalty?
Definition of Prepayment Penalty: The prepayment penalty is usually included in a clause in the mortgage agreement which states that if the borrower pays the mortgage significantly or in advance, usually after the borrower In five years. Sometimes the penalty is based on a percentage of the remaining balance or it can be several months of interest. Prepayment penalties protect the lender from the financial loss of interest income that would otherwise be paid over time.
- The prepayment penalty clause states that if the borrower significantly repays or repays the mortgage, the penalty will usually be imposed within the first five years of the loan.
- A prepayment penalty helps prevent the lender from losing interest.
- Mortgage lenders will have to disclose the prepayment penalty when taking out a new mortgage.
Prepayment Penalty means, Borrowers were fined for repaying loans before the due date. (In the case of a mortgage, this applies if there is no provision in the mortgage letter to meet the contract penalty.) See the relevant question regarding the prepayment penalty.
Prepayment Penalty can be defined as, If the loan has been refinanced or repaid before the due date in the loan documents, the bank or lender will charge a fee.
Literal Meanings of Prepayment Penalty
Meanings of Penalty:
Penalties for violating any law, statute or agreement.
A disability or disability imposed on a player or team, usually to break a rule (in sports and games).
Sentences of Penalty
The charge carries a maximum sentence of ten years in prison.
Referees, who follow the same habits as runners, control the game and impose fines if they break the rules.
Synonyms of Penalty
retribution, punitive action, punishment, penance, sanction