Voluntary prepayment clause: Copy, customize, and use instantly
Introduction
A voluntary prepayment clause allows a party to make early payments toward a loan or debt without being required to do so under the agreement. This clause typically outlines the conditions under which prepayment can be made, any penalties or discounts that apply, and the manner in which payments are credited. It is important for providing flexibility for the borrower or debtor while ensuring that the lender is fairly compensated.
Below are templates for voluntary prepayment clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard voluntary prepayment clause
This variation applies when early payments are allowed without penalty.
[Borrower Name] may, at its discretion, make voluntary prepayments toward the outstanding loan balance at any time without incurring any penalty. Any prepayment will be applied first to any accrued interest and then to the principal balance of the loan. Prepayments will reduce the remaining term of the loan, unless otherwise agreed by both parties.
Voluntary prepayment with penalty clause
This variation applies when a penalty is applied for early prepayment.
[Borrower Name] may make voluntary prepayments on the loan at any time; however, such prepayments shall be subject to a penalty of [X%] of the prepaid amount, to compensate for the lost interest revenue. The penalty will be deducted from the principal amount upon payment.
Voluntary prepayment with discount clause
This variation applies when a discount is applied for early repayment.
[Borrower Name] may make voluntary prepayments at any time, and if the prepayment is made before [specified date], a discount of [X%] will be applied to the total amount of the loan balance. The discount will reduce the principal amount due on the loan.
Voluntary prepayment with partial prepayment option clause
This variation applies when only partial prepayments are allowed.
[Borrower Name] may make voluntary partial prepayments on the loan at any time. The prepayment amount will be applied to the principal balance, and the loan's term will not be shortened unless agreed upon by both parties. If [Borrower Name] chooses to make a partial prepayment, it will not be obligated to make further prepayments.
Voluntary prepayment with adjustment of interest rate clause
This variation applies when prepayment causes an adjustment to the interest rate.
[Borrower Name] may make voluntary prepayments on the loan. If the total amount prepaid exceeds [X%] of the original loan amount within the first [Y] months, the interest rate on the remaining balance may be adjusted by [Z%]. This adjustment will reflect the early repayment and reduced risk for [Lender Name].
Voluntary prepayment with no impact on repayment schedule clause
This variation applies when the prepayment does not change the repayment schedule.
[Borrower Name] may make voluntary prepayments at any time without changing the original repayment schedule. The prepayment will be applied to the outstanding principal balance but will not alter the due dates of future payments unless explicitly agreed by both parties.
Voluntary prepayment with application to future payments clause
This variation applies when the prepayment applies to future payments.
[Borrower Name] may make voluntary prepayments on the loan, and such prepayments will be applied to future installments rather than the current balance. The prepayment will reduce the amount due for future payments, effectively shortening the duration of the loan.
Voluntary prepayment with early exit fee clause
This variation applies when an early exit fee is charged for prepayment.
[Borrower Name] may prepay all or part of the loan at any time, but such prepayment will be subject to an early exit fee of [X%] of the prepaid amount. The fee is intended to compensate [Lender Name] for the early termination of the loan agreement.
Voluntary prepayment with offset against future principal clause
This variation applies when prepayment offsets future principal payments.
[Borrower Name] may make voluntary prepayments at any time. Any prepayment made will be credited against the future principal payments of the loan, reducing the overall amount owed, but the due date for future payments will remain unchanged unless agreed upon otherwise by both parties.
Voluntary prepayment with restriction on prepayment amount clause
This variation applies when a maximum amount for prepayment is specified.
[Borrower Name] may make voluntary prepayments toward the loan balance, provided that no single prepayment exceeds [X%] of the outstanding loan balance within any [specified time period]. Prepayments exceeding this amount will require prior approval from [Lender Name].
Voluntary prepayment with early termination option clause
This variation applies when voluntary prepayment allows early termination of the loan.
[Borrower Name] may make a voluntary prepayment at any time, and if [Borrower Name] pays off the entire loan balance early, the loan agreement will terminate immediately, with no further obligations for either party. Any prepayment will be applied first to interest accrued and then to principal.
Voluntary prepayment with payment allocation clause
This variation applies when prepayments are allocated in a specific manner.
[Borrower Name] may make voluntary prepayments on the loan, which will be applied first to any late fees or penalties, second to accrued interest, and finally to the principal balance. [Borrower Name] may specify how the prepayment should be allocated, but [Lender Name] has the final say on the allocation of funds.
Voluntary prepayment with no reduction in loan term clause
This variation applies when the prepayment does not shorten the loan term.
[Borrower Name] may make voluntary prepayments at any time, but such prepayments will not shorten the loan term unless mutually agreed by both parties. The prepayment will be applied to reduce the outstanding principal balance, but the payment schedule and term will remain unchanged unless otherwise stipulated.
Voluntary prepayment with credit toward future obligations clause
This variation applies when prepayments are credited toward future obligations.
[Borrower Name] may make voluntary prepayments on the loan, and any prepayment will be credited toward future obligations. The prepayment will reduce the total loan balance, but the loan's due dates will remain unchanged unless an alternative arrangement is made by both parties.
Voluntary prepayment with prorated interest clause
This variation applies when prepayment affects the interest calculation.
[Borrower Name] may prepay all or part of the loan at any time. If a prepayment is made, the interest on the loan will be prorated based on the number of days the loan was active prior to the prepayment, and the remaining balance will accrue interest accordingly.
Voluntary prepayment with payment terms renegotiation clause
This variation applies when a prepayment leads to renegotiation of payment terms.
[Borrower Name] may make voluntary prepayments toward the loan. If the prepayment is substantial enough, both parties agree to renegotiate the payment terms, including interest rates, due dates, and other terms to reflect the early repayment.
Voluntary prepayment with fixed prepayment periods clause
This variation applies when prepayments can only occur during fixed periods.
[Borrower Name] may make voluntary prepayments only during the specified prepayment periods, which are [insert specific periods] within each year of the loan term. Any prepayment made outside of these periods will not be accepted unless both parties agree otherwise.
Voluntary prepayment with prepayment notification clause
This variation applies when a notification is required before prepayment.
[Borrower Name] agrees to notify [Lender Name] at least [X] days before making a voluntary prepayment. The notification will include the amount and timing of the prepayment, and [Lender Name] may adjust the loan terms if necessary.
Voluntary prepayment with approval clause
This variation applies when prepayment requires approval from the lender.
[Borrower Name] may make voluntary prepayments, but any prepayment in excess of [X%] of the loan balance requires prior approval from [Lender Name]. If approval is granted, the prepayment will be applied as outlined in the agreement.
Voluntary prepayment with payment plan revision clause
This variation applies when the prepayment leads to a revision of the payment plan.
[Borrower Name] may make voluntary prepayments at any time. If such prepayments are made, [Lender Name] agrees to revise the payment plan to reflect the reduced balance, including adjusting the monthly payment amount or payment schedule as appropriate.
Voluntary prepayment with prepayment discount clause
This variation applies when prepayment results in a discount on the principal.
[Borrower Name] may make voluntary prepayments on the loan at any time. If the prepayment is made within the first [X months/years], a discount of [X%] will be applied to the principal amount, reducing the total amount owed.
Voluntary prepayment with early repayment cap clause
This variation applies when there is a cap on early repayment amounts.
[Borrower Name] may make voluntary prepayments on the loan, but the total amount of voluntary prepayments made within any [specified period] will not exceed [X%] of the original loan amount. Any prepayment beyond this limit will require prior approval from [Lender Name].
Voluntary prepayment with adjustment to collateral clause
This variation applies when prepayment affects collateral requirements.
[Borrower Name] may make voluntary prepayments at any time. If the prepayment reduces the outstanding balance below a certain threshold, [Lender Name] may adjust the collateral requirements, releasing a portion of the collateral in proportion to the reduction in the loan balance.
Voluntary prepayment with adjusted repayment schedule clause
This variation applies when prepayment leads to adjustments in the repayment schedule.
[Borrower Name] may make voluntary prepayments on the loan, which will lead to an adjustment of the repayment schedule. Prepayments will reduce the total balance and may adjust the remaining installment amounts, subject to agreement by both parties.
Voluntary prepayment with reduction in interest charge clause
This variation applies when prepayment leads to a reduction in interest charges.
[Borrower Name] may make voluntary prepayments at any time. If the prepayment reduces the loan balance below [specified amount], the interest rate on the remaining balance will be reduced by [X%] as a reward for early repayment.
Voluntary prepayment with no refund clause
This variation applies when the prepayment does not result in a refund of prior payments.
[Borrower Name] may prepay any part of the loan at any time. However, no portion of any prior payments made will be refunded, and the prepayment will only apply to the outstanding balance going forward.
Voluntary prepayment with fixed penalty clause
This variation applies when early prepayment incurs a fixed penalty.
[Borrower Name] may prepay any amount of the loan at any time. However, any prepayment will incur a fixed penalty of [X dollars] for each instance of prepayment, irrespective of the prepayment amount. The penalty is to compensate for the reduced interest income to the lender.
Voluntary prepayment with prepayment deferral clause
This variation applies when prepayment is allowed but deferred to a future date.
[Borrower Name] may make voluntary prepayments, but any such prepayment will not be accepted until after [specified date]. This deferral allows the lender time to adjust to the change in payment structure before receiving the prepayment.
Voluntary prepayment with no reduction in remaining interest clause
This variation applies when prepayment does not reduce the remaining interest payments.
[Borrower Name] may make voluntary prepayments at any time, but such prepayments will not reduce the total amount of interest payable over the life of the loan. Instead, the prepayment will be applied to reduce the principal, but the interest schedule will remain unchanged.
Voluntary prepayment with extended repayment term clause
This variation applies when prepayment extends the loan repayment term.
[Borrower Name] may make voluntary prepayments on the loan at any time. However, [Borrower Name] may elect to extend the term of the loan by [X months] if they prepay an amount equal to [Y%] of the original principal balance.
Voluntary prepayment with one-time early repayment clause
This variation applies when a one-time early repayment option is granted.
[Borrower Name] may make a one-time early repayment of up to [X%] of the loan principal without incurring any penalty. Any further prepayments will require approval and may be subject to penalty fees as specified in this agreement.
Voluntary prepayment with reduced fees clause
This variation applies when early prepayment reduces fees.
[Borrower Name] may make voluntary prepayments at any time. If a prepayment is made within the first [X months/years], [Borrower Name] will incur reduced fees on the loan, including a reduction in early repayment penalties or processing fees.
Voluntary prepayment with reamortization option clause
This variation applies when the borrower can reamortize the loan after prepayment.
[Borrower Name] may prepay any portion of the loan at any time. After a prepayment is made, [Borrower Name] has the option to reamortize the remaining balance and adjust the monthly payment amount to reflect the reduced principal.
Voluntary prepayment with pro-rata application clause
This variation applies when the prepayment is applied proportionally.
[Borrower Name] may make voluntary prepayments on the loan at any time. Prepayments will be applied on a pro-rata basis, first toward any accrued interest and then toward the outstanding principal balance.
Voluntary prepayment with specified minimum prepayment amount clause
This variation applies when a minimum prepayment amount is required.
[Borrower Name] may make voluntary prepayments, but each prepayment must be at least [X amount]. Prepayments below this threshold will not be accepted unless otherwise agreed by both parties in writing.
Voluntary prepayment with no alteration to repayment schedule clause
This variation applies when the prepayment does not alter the existing repayment schedule.
[Borrower Name] may make voluntary prepayments at any time, but such prepayments will not alter the existing repayment schedule. The total loan amount will be reduced, but future payments will remain due as per the original schedule.
Voluntary prepayment with quarterly prepayment window clause
This variation applies when prepayments can only be made during specific quarterly periods.
[Borrower Name] may make voluntary prepayments, but only during the designated quarterly prepayment windows, which occur every [X] months. Prepayments made outside of these windows will be subject to review and potential penalty fees.
Voluntary prepayment with payment priority clause
This variation applies when prepayment is prioritized toward certain portions of the loan.
[Borrower Name] may make voluntary prepayments, and any such prepayment will first be applied toward any accrued interest and then to the principal balance. This ensures that interest is fully paid before principal reductions are applied.
Voluntary prepayment with a sliding scale penalty clause
This variation applies when the penalty for prepayment decreases over time.
[Borrower Name] may prepay the loan at any time; however, such prepayment will be subject to a penalty based on the prepayment amount and timing. The penalty is on a sliding scale, decreasing by [X%] every [specified time period].
Voluntary prepayment with interest recalculation clause
This variation applies when prepayment leads to recalculation of interest.
[Borrower Name] may make voluntary prepayments at any time. Upon making a prepayment, [Lender Name] will recalculate the remaining interest due, adjusting the outstanding interest to reflect the lower loan balance.
Voluntary prepayment with minimum balance requirement clause
This variation applies when the loan balance must not fall below a minimum amount after prepayment.
[Borrower Name] may make voluntary prepayments, but the remaining balance after the prepayment must not fall below [X%] of the original loan amount. If the prepayment exceeds this limit, [Borrower Name] will need approval from [Lender Name].
Voluntary prepayment with partial balance adjustment clause
This variation applies when only a portion of the prepayment applies to the principal balance.
[Borrower Name] may make voluntary prepayments at any time. However, any prepayment made will only apply to [X%] of the total principal balance, with the remainder allocated to future payments according to the original schedule.
Voluntary prepayment with refund for early interest clause
This variation applies when early prepayment results in a refund of part of the interest paid.
[Borrower Name] may prepay the loan at any time. If the prepayment is made within the first [X months], [Borrower Name] will receive a refund for a portion of the interest previously paid, calculated on a pro-rata basis based on the early repayment.
Voluntary prepayment with interest-only period clause
This variation applies when prepayment affects the interest-only period.
[Borrower Name] may make voluntary prepayments, but any prepayment made within the interest-only period will not reduce the principal balance until the end of that period. The prepayment will apply to future interest charges after the principal reduction.
Voluntary prepayment with repayment acceleration clause
This variation applies when a prepayment causes acceleration of remaining repayments.
[Borrower Name] may make voluntary prepayments, but if the prepayment exceeds [X%] of the original loan amount, the repayment schedule will be accelerated, with the next payment due immediately or within [Y days].
Voluntary prepayment with reinvestment option clause
This variation applies when the prepayment can be reinvested under certain terms.
[Borrower Name] may make voluntary prepayments, and [Lender Name] may offer a reinvestment option for the prepaid amount. [Borrower Name] can choose to reinvest the prepayment into a different financial product or extend the loan terms for future flexibility.
Voluntary prepayment with minimum prepayment frequency clause
This variation applies when prepayments must occur at regular intervals.
[Borrower Name] may make voluntary prepayments at any time, but such prepayments must be made at least once every [X months]. Prepayments made outside this period may not be accepted unless otherwise agreed by both parties.
Voluntary prepayment with maximum prepayment threshold clause
This variation applies when there is a cap on the amount that can be prepaid.
[Borrower Name] may make voluntary prepayments, but the total amount of prepayments made in any [specified time period] will not exceed [X%] of the original loan amount. Prepayments exceeding this amount will require approval from [Lender Name].
Voluntary prepayment with reduction in term length clause
This variation applies when prepayments shorten the loan term.
[Borrower Name] may make voluntary prepayments at any time. Prepayments will reduce the outstanding principal and will also shorten the loan term, resulting in an earlier final payment date. The new payment schedule will be recalculated after each prepayment.
Voluntary prepayment with prepayment protection clause
This variation applies when prepayment is protected against penalties under certain conditions.
[Borrower Name] may make voluntary prepayments without incurring penalties if [specified conditions] are met, such as [meeting financial goals, specific timeframes, or other conditions]. If the conditions are not met, the prepayment may be subject to the agreed penalties.
Voluntary prepayment with renegotiation option clause
This variation applies when prepayment leads to renegotiation of terms.
[Borrower Name] may make voluntary prepayments at any time. If [Borrower Name] prepays more than [X%] of the loan balance, [Party Name] agrees to renegotiate the loan terms, which may include changes to the interest rate, repayment schedule, or other terms.
Voluntary prepayment with lump-sum repayment clause
This variation applies when a lump-sum prepayment is allowed.
[Borrower Name] may make a lump-sum prepayment of any amount at any time. The lump-sum payment will be applied to reduce the outstanding loan balance and may result in a change in the payment schedule depending on the amount prepaid.
Voluntary prepayment with eligibility for refinancing clause
This variation applies when prepayment makes the loan eligible for refinancing.
[Borrower Name] may prepay the loan at any time, and if the prepayment exceeds [X%] of the original balance, the loan will become eligible for refinancing. Refinancing options will be offered at competitive rates based on the updated loan balance and market conditions.
Voluntary prepayment with a grace period for future payments clause
This variation applies when prepayment grants a grace period for future payments.
[Borrower Name] may make voluntary prepayments at any time, and any such prepayment will grant a grace period for future payments. The grace period will be equal to the amount prepaid, allowing [Borrower Name] to delay future payments without penalties.
Voluntary prepayment with priority allocation clause
This variation applies when prepayments are applied to specific parts of the loan.
[Borrower Name] may make voluntary prepayments, and such prepayments will be allocated first to any accrued interest, second to any fees or charges, and finally to the principal balance. This prioritization ensures that outstanding costs are settled before reducing the principal.
Voluntary prepayment with loan term extension clause
This variation applies when prepayment extends the term of the loan.
[Borrower Name] may make voluntary prepayments, but if the total amount prepaid exceeds [X%] of the loan balance, the repayment term may be extended by up to [Y months]. This extension is to ensure that the payments remain manageable and aligned with [Borrower Name]'s financial circumstances.
Voluntary prepayment with fixed percentage option clause
This variation applies when a fixed percentage of the loan must be prepaid.
[Borrower Name] may make voluntary prepayments, but each prepayment must be at least [X%] of the outstanding loan balance. This ensures that the loan balance is reduced in meaningful increments without frequent small payments.
Voluntary prepayment with partial principal reduction clause
This variation applies when prepayments only partially reduce the principal.
[Borrower Name] may make voluntary prepayments at any time, but such prepayments will reduce only [X%] of the total principal balance, with the remainder of the prepayment applied to interest and fees accrued. This ensures that interest continues to be paid proportionally.
Voluntary prepayment with capital lock clause
This variation applies when prepayments are made but the borrower cannot access prepayment amounts.
[Borrower Name] may make voluntary prepayments at any time; however, any amounts prepaid will be locked for a period of [X months] and cannot be withdrawn or refunded during this time. This is to ensure stability in the loan repayment process.
Voluntary prepayment with prepayment confirmation clause
This variation applies when a prepayment requires confirmation from the lender.
[Borrower Name] may make voluntary prepayments, but any prepayment amount exceeding [X%] of the outstanding loan balance requires written confirmation from [Lender Name] prior to being accepted. This ensures both parties are in agreement with the terms of the prepayment.
Voluntary prepayment with discretionary early repayment clause
This variation applies when prepayment is discretionary and at the lender’s discretion.
[Borrower Name] may request to make voluntary prepayments at any time, but such prepayments will be subject to [Lender Name]’s approval, particularly if the prepayment is deemed to be outside the agreed schedule or amounts. This ensures flexibility but with oversight from the lender.
Voluntary prepayment with no refund of interest clause
This variation applies when prepayment does not result in a refund of prepaid interest.
[Borrower Name] may prepay the loan at any time. However, any interest that has already been paid will not be refunded, regardless of the prepayment amount. Prepayment will only reduce the remaining principal balance.
Voluntary prepayment with reduced early settlement discount clause
This variation applies when prepayment is rewarded with a discount on the total settlement.
[Borrower Name] may make a voluntary prepayment at any time, and if the full outstanding balance is prepaid, [Borrower Name] will receive a discount of [X%] on the total amount due. The discount amount will be subtracted from the final loan settlement balance.
Voluntary prepayment with final installment offset clause
This variation applies when prepayment offsets the final installment of the loan.
[Borrower Name] may make voluntary prepayments at any time, and the prepayment will be used to offset the final installment due under the loan agreement. The remaining balance on the final installment will be reduced by the amount of the prepayment.
Voluntary prepayment with payment application restriction clause
This variation applies when prepayments are restricted in their application.
[Borrower Name] may make voluntary prepayments, but these prepayments will not be applied to the loan balance until the following payment due date. This ensures that the prepayment is applied according to the original payment schedule, and no early application is made.
Voluntary prepayment with automatic loan reduction clause
This variation applies when prepayments automatically reduce the loan balance.
[Borrower Name] may make voluntary prepayments at any time, and such prepayments will automatically reduce the loan balance. The loan repayment schedule will be updated accordingly to reflect the reduced loan balance, but the prepayment will not alter the due dates unless mutually agreed upon.
Voluntary prepayment with payment frequency change clause
This variation applies when prepayment changes the payment frequency.
[Borrower Name] may prepay the loan at any time. Upon making a prepayment of [X%] of the loan balance, [Borrower Name] can elect to change the payment frequency from monthly to quarterly, or vice versa, depending on [Borrower Name]’s preference and financial situation.
Voluntary prepayment with penalty cap clause
This variation applies when there is a cap on prepayment penalties.
[Borrower Name] may prepay the loan at any time. However, the penalty for making early prepayments will not exceed [X%] of the total loan balance, even if the prepayment exceeds that amount. This cap ensures that penalties do not exceed a reasonable amount for early settlement.
Voluntary prepayment with partial penalty clause
This variation applies when the penalty is only partial for prepayment.
[Borrower Name] may make voluntary prepayments, but any amount prepaid will incur a penalty equal to [X%] of the prepaid amount. However, if the prepayment occurs after [specified period], the penalty will be reduced by [Y%].
Voluntary prepayment with adjusted interest rate clause
This variation applies when prepayment leads to an adjustment in the interest rate.
[Borrower Name] may prepay part or all of the loan at any time. Following such prepayment, [Lender Name] reserves the right to adjust the interest rate applied to the remaining balance, reflecting the new risk profile and payment structure after the prepayment.
Voluntary prepayment with refund of fees clause
This variation applies when prepayment allows for a refund of certain fees.
[Borrower Name] may prepay the loan at any time, and if the prepayment is made within [X months/years], [Borrower Name] will receive a refund of all or part of the fees previously paid, including but not limited to processing, administrative, and early settlement fees.
Voluntary prepayment with interest deferral clause
This variation applies when prepayment defers interest charges.
[Borrower Name] may prepay the loan at any time, and upon making a prepayment, interest on the remaining balance will be deferred for [X months]. This deferral will allow [Borrower Name] to reduce the total interest paid on the loan while maintaining the payment schedule.
Voluntary prepayment with allocation flexibility clause
This variation applies when the borrower has flexibility in how prepayments are allocated.
[Borrower Name] may make voluntary prepayments at any time. Prepayments may be allocated at the borrower’s discretion, either towards reducing principal or covering accrued interest, based on [Borrower Name]’s financial goals or strategy.
Voluntary prepayment with early repayment cap clause
This variation applies when there is a cap on the amount that can be prepaid early.
[Borrower Name] may make voluntary prepayments, but the total prepayment amount cannot exceed [X%] of the original loan amount within any 12-month period. Any prepayment exceeding this limit will require prior written approval from [Lender Name].
Voluntary prepayment with reduction in monthly payments clause
This variation applies when prepayment leads to a reduction in monthly payments.
[Borrower Name] may prepay the loan at any time, and any amount prepaid will result in a reduction of monthly payments. The amount of the monthly payment will be recalculated based on the remaining loan balance and the original loan term.
Voluntary prepayment with early payoff option clause
This variation applies when prepayment allows for early loan payoff.
[Borrower Name] may make voluntary prepayments at any time and, upon prepaying the entire loan balance, may request an early payoff of the loan. The early payoff will result in the cancellation of the remaining obligations under the loan agreement.
Voluntary prepayment with interest offset clause
This variation applies when prepayment offsets future interest payments.
[Borrower Name] may make voluntary prepayments, and such prepayments will offset interest charges that would have accrued in the future. Prepayments will be applied to reduce the outstanding balance, which will reduce the interest liability for the remaining term of the loan.
Voluntary prepayment with additional prepayment options clause
This variation applies when additional prepayment options are available to the borrower.
[Borrower Name] may make voluntary prepayments at any time. If the prepayment exceeds [X%] of the original loan amount, [Borrower Name] may select from additional prepayment options, such as adjusting the repayment schedule or applying the prepayment to future payments.
Voluntary prepayment with reinvestment credit clause
This variation applies when the prepayment creates a credit for future reinvestment.
[Borrower Name] may make voluntary prepayments, and if the prepayment exceeds [X%] of the loan balance, [Borrower Name] will receive a credit equal to [Y%] of the prepaid amount, which may be used to reduce future loan payments or for reinvestment in future business opportunities.
Voluntary prepayment with cap on total early payment clause
This variation applies when there is a cap on the total amount of prepayment allowed.
[Borrower Name] may make voluntary prepayments, but the total amount prepaid during any 12-month period cannot exceed [X%] of the original loan amount. Any prepayment above this limit will require the approval of [Lender Name].
Voluntary prepayment with regular prepayment reviews clause
This variation applies when prepayments are reviewed regularly.
[Borrower Name] may prepay the loan at any time, but any prepayment exceeding [X%] of the loan balance in any 12-month period will trigger a prepayment review by [Lender Name]. The review will assess whether the prepayment is in alignment with the loan terms and financial objectives.
Voluntary prepayment with early payment rebate clause
This variation applies when early payments are rewarded with a rebate.
[Borrower Name] may make voluntary prepayments at any time. If a prepayment is made within [X months], [Borrower Name] will receive a rebate of [Y%] of the prepayment amount, applied as a credit toward future payments or a reduction in the outstanding balance.
Voluntary prepayment with interest crediting clause
This variation applies when prepayment leads to a credit toward future interest payments.
[Borrower Name] may prepay any portion of the loan at any time, and the prepayment will earn an interest credit applied to future interest payments. This will reduce the total interest liability by a percentage based on the prepayment amount.
Voluntary prepayment with collateral adjustment clause
This variation applies when prepayment affects collateral requirements.
[Borrower Name] may make voluntary prepayments, and upon a prepayment exceeding [X%] of the original loan balance, the collateral requirements may be adjusted. If the outstanding loan balance falls below a specific threshold, the collateral required may be reduced or released.
Voluntary prepayment with principal reduction priority clause
This variation applies when prepayments are applied primarily to the principal.
[Borrower Name] may make voluntary prepayments at any time, and all prepayments will be applied first to the principal balance. Any interest accrued will continue to be payable according to the original loan schedule.
Voluntary prepayment with staggered prepayment options clause
This variation applies when prepayments are staggered over time.
[Borrower Name] may prepay any portion of the loan at any time, but prepayments must be made in at least [X] increments. Staggered payments allow for periodic adjustments in the loan balance without incurring penalties for early prepayment.
Voluntary prepayment with no penalties clause
This variation applies when prepayments are made without penalties.
[Borrower Name] may make voluntary prepayments on the loan at any time without incurring any penalties or fees. Prepayments will reduce the total principal outstanding and shorten the term of the loan accordingly.
Voluntary prepayment with lump sum or periodic options clause
This variation applies when the borrower can choose between lump sum or periodic prepayments.
[Borrower Name] may prepay the loan either as a lump sum or through periodic installments. If the borrower chooses periodic prepayments, the loan balance will be reduced progressively, and the remaining payments will be adjusted accordingly.
Voluntary prepayment with interest deferral clause
This variation applies when prepayment allows deferring interest.
[Borrower Name] may make voluntary prepayments, and if the prepayment exceeds [X%] of the loan balance, the interest on the remaining balance will be deferred for [Y months]. This deferral period will help ease financial burdens for the borrower.
Voluntary prepayment with adjustable loan terms clause
This variation applies when the loan terms change after prepayment.
[Borrower Name] may prepay the loan at any time. Upon prepayment, [Lender Name] will reassess the loan terms and, if necessary, offer more favorable terms, including reducing the interest rate or adjusting the repayment schedule.
Voluntary prepayment with restructured schedule clause
This variation applies when prepayment results in a restructured repayment schedule.
[Borrower Name] may make voluntary prepayments, and upon prepayment, the repayment schedule will be restructured, allowing the remaining payments to be reduced or recalculated. The new schedule will reflect the prepayment amount.
Voluntary prepayment with fixed prepayment limit clause
This variation applies when there is a limit on the amount of prepayment.
[Borrower Name] may make voluntary prepayments, but the total amount of prepayments in any calendar year cannot exceed [X%] of the original loan amount. Prepayments above this limit will require approval from [Lender Name].
Voluntary prepayment with maturity date extension clause
This variation applies when prepayment affects the maturity date.
[Borrower Name] may prepay the loan in part or full at any time. If prepayment reduces the loan balance by more than [X%], the maturity date will be extended to allow for continued payments on the revised balance.
Voluntary prepayment with prepayment adjustment clause
This variation applies when prepayment leads to a one-time adjustment.
[Borrower Name] may make a voluntary prepayment at any time, and such prepayment will trigger an adjustment to the loan's interest rate. The new rate will be recalculated based on the reduced principal and remaining loan term.
Voluntary prepayment with application to future payments clause
This variation applies when prepayments are applied to future payments.
[Borrower Name] may make voluntary prepayments, and these prepayments will be applied to future monthly payments, reducing the upcoming payments due under the original loan schedule.
Voluntary prepayment with prorated penalty clause
This variation applies when a penalty is prorated based on the prepayment amount.
[Borrower Name] may make voluntary prepayments at any time, but a prorated penalty will apply based on the amount prepaid. The penalty will decrease proportionally as the prepayment amount decreases.
Voluntary prepayment with interest rate reduction clause
This variation applies when prepayment reduces the interest rate.
[Borrower Name] may make voluntary prepayments at any time. If the prepayment reduces the outstanding balance by [X%], the interest rate on the remaining balance will be reduced by [Y%] as a reward for early repayment.
Voluntary prepayment with early repayment rebate clause
This variation applies when a rebate is provided for early repayment.
[Borrower Name] may make voluntary prepayments at any time. If the borrower repays the entire loan balance before the agreed-upon date, a rebate of [X%] of the interest paid to date will be credited to the loan balance.
Voluntary prepayment with no modification to due dates clause
This variation applies when prepayment does not alter due dates.
[Borrower Name] may make voluntary prepayments on the loan. However, the prepayment will not modify the due dates of any remaining payments. Future payments will continue to be due as originally scheduled, but the prepayment will reduce the outstanding loan balance.
Voluntary prepayment with fixed schedule penalties clause
This variation applies when penalties are fixed for prepayment outside of a schedule.
[Borrower Name] may make voluntary prepayments, but if the prepayment is made outside of the agreed-upon payment schedule, a fixed penalty of [X%] of the prepayment amount will be charged.
Voluntary prepayment with special prepayment window clause
This variation applies when prepayment can only occur within a certain window.
[Borrower Name] may make voluntary prepayments only within the specified prepayment window, which occurs between [date] and [date]. Any prepayment made outside this window will require prior approval from [Lender Name].
Voluntary prepayment with automatic balance adjustment clause
This variation applies when prepayment results in an automatic loan balance adjustment.
[Borrower Name] may make voluntary prepayments at any time, and the loan balance will be automatically adjusted to reflect the prepayment. This adjustment will reduce both the total principal and future interest payments.
Voluntary prepayment with early payoff cap clause
This variation applies when there is a cap on the amount that can be prepaid for early payoff.
[Borrower Name] may make voluntary prepayments, but the total amount of prepayment applied to the loan balance for early payoff will be capped at [X%] of the original loan amount. Prepayments beyond this limit will require renegotiation of the loan terms.
Voluntary prepayment with refinancing eligibility clause
This variation applies when prepayment makes the loan eligible for refinancing.
[Borrower Name] may prepay the loan at any time, and if the prepayment exceeds [X%] of the loan balance, [Borrower Name] will be eligible to refinance the remaining loan balance at new terms, including a reduced interest rate or extended repayment schedule.
Voluntary prepayment with partial adjustment clause
This variation applies when prepayment partially adjusts the loan balance.
[Borrower Name] may make voluntary prepayments, and the prepayment will be applied to the principal, but the full impact of the prepayment will only be realized after [X months], at which point the loan balance and payment schedule will be adjusted accordingly.
Voluntary prepayment with minimum prepayment threshold clause
This variation applies when prepayment is subject to a minimum amount.
[Borrower Name] may make voluntary prepayments, but each prepayment must be at least [X dollars]. Prepayments below this threshold will not be accepted unless approved by [Lender Name].
Voluntary prepayment with application to specific loan categories clause
This variation applies when prepayment is applied to specific loan categories.
[Borrower Name] may make voluntary prepayments, and such prepayments will be applied first to any higher-interest portions of the loan, such as unsecured debt, before being applied to lower-interest portions of the loan.
Voluntary prepayment with reinvestment opportunity clause
This variation applies when prepayment provides the option for reinvestment.
[Borrower Name] may make voluntary prepayments, and if the prepayment amount exceeds [X%] of the loan balance, [Borrower Name] will be offered the opportunity to reinvest the amount in a different investment product provided by [Lender Name].
Voluntary prepayment with outstanding balance notification clause
This variation applies when the lender notifies the borrower about the remaining balance after prepayment.
[Borrower Name] may make voluntary prepayments at any time. After the prepayment is made, [Lender Name] will notify [Borrower Name] within [X days] of the remaining loan balance and any changes to the repayment schedule.
Voluntary prepayment with rebate of principal clause
This variation applies when the borrower receives a rebate on the principal after prepayment.
[Borrower Name] may make voluntary prepayments at any time. If the borrower prepays more than [X%] of the principal, [Lender Name] will provide a rebate of [Y%] on the total prepayment amount, which will be credited back to [Borrower Name]'s account.
Voluntary prepayment with maximum prepayment frequency clause
This variation applies when there is a cap on the frequency of prepayments.
[Borrower Name] may make voluntary prepayments, but no more than [X] prepayments may be made in any 12-month period. Prepayments made beyond this limit will require renegotiation of the loan agreement and may incur additional fees.
Voluntary prepayment with deferred interest application clause
This variation applies when interest is deferred after prepayment.
[Borrower Name] may make voluntary prepayments, and any prepayment will result in interest charges being deferred for [X months]. The prepayment will reduce the principal, but the borrower will not incur interest on the reduced amount until the deferment period ends.
Voluntary prepayment with full settlement option clause
This variation applies when prepayment results in full settlement of the loan.
[Borrower Name] may prepay the loan in full at any time, at which point the loan will be considered fully settled. Any remaining accrued interest and fees will be paid along with the prepayment to finalize the loan settlement.
Voluntary prepayment with early repayment charge clause
This variation applies when early prepayment incurs a charge.
[Borrower Name] may prepay the loan at any time, but any prepayment made within [X months] of the loan's origination will incur an early repayment charge of [Y%] of the prepayment amount.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.