prepayment

prepayment or prepayments

(1) noun - A term used to describe loan or bond principal payments that are made in excess of the scheduled principal payments and before maturity. Any amount paid to reduce the principal before the due date or in excess of the required principal amortization. Prepayments may be voluntary or involuntary. For example, most residential mortgage loan contracts permit the homeowner to voluntarily prepay his or her loan at any time. Involuntary prepayments are liquidations resulting from foreclosures, condemnations, or casualty.

2) verb - The action of making excess or early payments. American Banker Glossary

* * *

prepayment pre‧pay‧ment [ˌpriːˈpeɪmənt] noun [countable, uncountable]

1. the act of paying for something that you have not yet received, or the amount involved:

• Hall-Houston Offshore received $20 million in prepayments for natural gas production in the Gulf of Mexico.

2. FINANCE the act of repaying a loan to the lender before the normal time, or the amount involved:

• TW Holdings Inc. is making two prepayments totaling $70 million on senior debt.

• We'd like to get out of the loan, but it carries expensive prepayment penalties (= additional costs for repaying early ) .

3. TAX the act of paying tax in an earlier tax year than the time it needs to be paid, in order to avoid paying more tax later, or the amount involved

* * *

   In mortgages, any unscheduled principal payment made in addition to the normal amortization.

   ► See Amortization.