Prepayment

1. Banking.

The non-contractual early repayment by bank customers of, for example, fixed rate mortgages.

2. Accounting.

An amount paid in advance for a financial benefit, represented by an asset in the organisation's balance sheet.

It is a prepaid expense.

See also

• Accrual
• Average effective maturity
• Bookkeeping
• Early Repayment Charge
• Extension risk
• Prepayment risk
• Prepayments