Pre-payment penalty a penalty charged for paying off a loan too early. It is also termed as Additional fee imposed by some loan agreements where a borrower retires a loan before its scheduled pay-off date. Prepayment penalty is usually equivalent to three months of interest on the loan. Also called breakage cost.
An additional fee a lender may charge if a borrower pays off all or part of the loan balance before a period chosen by the lender or before the loan is due. This process is called as Prepayment Penalty.
Mortgage Pre-Payment Penalty = 500
Calculate the pre-payment mortgage amount for the loan of Rs. 100000 at 5%.
Total Mortgage Pay-off = 100500