Definitions for "PREPAYMENT PRIVILEGE"
A set amount of additional principal that can be made on a mortgage as set out in the mortgage agreement. This amount will directly reduce the principal balance.
A clause in some loan contracts allowing the borrower to pay off the debt prior to its due date without incurring a penalty.
A clause inserted in a mortgage which give the borrower the privilege of paying off all or part of the mortgage debt ahead of the maturity date.