prepayment

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Related to Pre-Payment: Prepayment penalty

Prepayment

1. The payment of a debt in full before it is due. Prepayment is good for the borrower because it relieves him/her of the debt, but it deprives the lender of interest he/she would have received otherwise. As a result, some lenders attach prepayment penalties to loans to disincentivize prepayments. Prepayment can me a major risk to collateralized mortgage obligations as coupon payments are based on interest received from the underlying mortgages. Less commonly, this is called anticipation. See also: Prepayment risk.

2. Payment in advance for a good or service not yet received.

prepayment

A payment made before the day it is due. For example, sending a check on the transaction date for securities bought with regular-way delivery will almost surely result in prepayment.

prepayment

or

payment in advance

an expense which is paid in one trading period but which is properly chargeable against the revenues or profits of future trading periods. For example, if a company preparing accounts for the year to 31 December pays its annual rent on 1 April, then only three quarters of that rent relates to the current trading period, the remaining quarter being a prepayment for use of the building from 1 January to 31 March in the next trading period. Prepayments are counted as part of the company's assets at the end of the trading period and are usually included as part of DEBTORS in the firm's BALANCE SHEET. See ACCRUAL.

Prepayment

A payment made by the borrower over and above the scheduled mortgage payment.

If the additional payment pays off the entire balance it is a “prepayment in full”; otherwise, it is a “partial prepayment.” See Partial Prepayments.

References in periodicals archive ?
3 million non-recourse floating rate interest-only loan features a 24-month term with one extension option and flexible pre-payment.
Tatsuya Konoshita, chairman of GL's executive committee, the pre-payment of the Cyprus loans was made in the best interest of GL since the principal was paid earlier, but the pre-payment included all interest until September 30.
At present, no pre-payment penalty is charged on floating rate loans.
Consumers wishing to convert from single phase conventional to pre-payment metering can do so by completing the relevant application and ensuring their account with Erongo RED, as applicable on the conventional meter, is paid up in full.
He said it was not the first time he has been sent a bill, despite topping up his pre-payment meter spending between pounds 15 and pounds 20 a week in tokens.
The consumer organisation called on suppliers to make pre-payment energy more affordable and convenient.
Some suppliers are believed to have charged pre-payment customers pounds 100 a year extra and pounds 80 a year more for customers who pay by cash or cheque instead of direct debit.
He wants them to curb gas and electricty prices on pre-payment domestic meters which charge vulnerable families pounds 225 a year MORE than those who use banking orders.
Shadow energy secretary Greg Clark said a Tory government would make it illegal for power companies to charge unfair price premiums for customers with pre-payment meters - potentially saving almost six million households as much as pounds 250 annually.
CYNON VALLEY MP Ann Clwyd has urged the Government to tackle unfair energy pre-payment meter premiums.
THIS is information for your readers who have a pre-payment meter for electricity from British Gas.