Glossary term
Prepayment charge
An amount a lender may charge when a mortgage is paid out, transferred, broken, or prepaid beyond the contract's permitted privilege before term-end.
Plain meaning
What prepayment charge means
The charge is a possible contract-specific cost of changing or repaying a mortgage before the contract permits it without charge.
How OpenBook uses it
A transaction cost, not a universal formula
OpenBook uses a prepayment charge as a contract-specific cost that can affect sale, switching, refinancing, or early-repayment illustrations.
Common boundary
Privilege and charge are separate
A prepayment charge is not the same as a prepayment privilege. The contract and lender's disclosed method determine the actual charge.