prepayment penalty
A penalty, in the form of a fee, charged to a borrower who pays off a mortgage early.
Definition from Nolo’s Plain-English Law Dictionary
A fee imposed on a borrower who pays off a loan (usually a mortgage) before its due date. Lenders impose this kind of fee to encourage borrowers to hold a debt -- and keep paying interest on it -- for the whole term of the loan.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:22 pm
