Prepayment privilege

Prepayment privileges are written as two numbers — say 20/20 — meaning you can make lump-sum payments of up to 20% of the original principal each year AND increase your regular payment by up to 20%, both penalty-free.

These are one of the most overlooked features when comparing offers. A slightly higher rate with generous 20/20 privileges can beat a rock-bottom rate with stingy 10/10 terms if you plan to prepay — every extra dollar goes straight to principal.

Privileges usually reset annually and don't carry forward, so using them consistently (even small monthly lump sums) is how borrowers shave years off the amortization without ever triggering a penalty.