GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
^
50% - Moderately

Pre-payment


Synonyms:accelerated mortgage payments, additional mortgage payments, extra mortgage payments, mortgage pre-payments, pre-payments
Filed Under: financial-banking, mortgages
Tags: banking, mortgage
 

Definition of pre-payment

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:

  • additional principal payment   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   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.
  • closed mortgage   Closed mortgages involve a strict repayment schedule of a specific amount with optional limited lump sum payments and payment increases.
  • down payment   The portion of the purchase price a buyer pays, in cash, at the time the loan originates.
  • interest rate differential (IRD)   The penalty one pays for breaking a mortgage.
  • lump sum payment   One-time single-sum payment or payout.
  • mortgage (mtg)   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.
  • mortgage payment   A periodic payment used to pay off a mortgage's principal and interest.
  • pre-payment clause   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.
  • pre-payment penalty   A lender's charge to the borrower for paying off the loan before the end of the term.

More Related Terms and Acronyms

Search the Glossary

Try Our Mortgage Calculator Now
Did you know that you can save more than $20,000 in interest and cut almost three years off a $400,000 mortgage by switching to an accelerated payment schedule? Try our mortgage calculator and see how accelerated payments can affect your mortgage!
Calculator Buttons
 
Mortgage Rates
Getting a low mortgage rate can mean the difference between you buying your dream home and... just a house. Look no further, apply today and get a great rate on your mortgage.
Mortgage Rates
 
Mortgage Brokers
With over a decade of online familiarity, it's fair to say that our mortgage brokers hold the experience needed to find you the best mortgage rates and provide you with top-notch service.
Mortgage Brokers Hold Experience