Partial Prepayment

Partial prepayment allows borrowers to make additional principal payments beyond scheduled amounts without fully settling the loan, reducing total interest and shortening loan term while maintaining active financing.


Allowance LimitsTypical Terms
Annual maximum10-25% of outstanding balance
Penalty thresholdAbove allowance incurs fees
FrequencyAnytime during year
ApplicationPrincipal reduction only
Impact ExampleAED 2M Loan, 5%, 25 Years
Regular paymentAED 11,684 monthly
Annual extra AED 50,000Saves 8 years, AED 450,000 interest
Annual extra AED 100,000Saves 12 years, AED 720,000 interest
Strategic UseApplication
Bonus paymentsAnnual windfall allocation
Tax refundsDebt reduction
Rental profitInvestment property cash flow
Cost efficiencyHigh ROI vs other investments

Related Terms

Prepayment PenaltyLoan AmortizationReducing Balance MortgagePrincipal Payment

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