Prepayment vs Buydown - What's the difference?

prepayment | buydown | Synonyms |

Prepayment is a synonym of buydown.


As nouns the difference between prepayment and buydown

is that prepayment is a payment in advance while buydown is (finance) an accelerated repayment of the principal of a loan.

prepayment

English

Noun

(en noun)
  • A payment in advance.
  • buydown

    Alternative forms

    * buy-down

    Noun

    (en noun)
  • (finance) An accelerated repayment of the principal of a loan.
  • A payment by a third-party to a lender to reduce some of all of the payments otherwise required, especially in first few years of the loan, thereby enhancing the apparent quality of the loan.
  • Synonyms

    * (accelerated repayment of principal) prepayment, accelerated or lump-sum amortization.