Prepayment Clause
A prepayment clause in real estate is a provision in a mortgage or loan agreement that specifies the terms under which a borrower can repay the loan, either partially or in full, before the scheduled due date. This clause often details whether prepayment is allowed and if there are any penalties or fees associated with doing so. The purpose of a prepayment clause is to protect the lender from potential loss of interest income if the borrower pays off the loan early.