Jurisdiction(s):
United Kingdom

Key definition

Prepayment definition

What does Prepayment mean? In receivables finance (factoring, invoice discounting, supply chain finance and receivables purchase agreements), a prepayment is an advance paid by the receivables purchaser to the seller on account of the purchase price of an approved receivable (approved debt). It is typically calculated as the prepayment percentage (advance rate) of the notified value of that receivable; the balance is deferred consideration, payable after collection, net of fees, dilutions, set-off, credit notes and agreed reserves. This is a contractual concept rather than one defined by legislation or case law. Its use and effect are broadly consistent across England & Wales, Scotland, Northern Ireland...

Real estate investment and development finance: LMA REF repayment, mandatory/voluntary prepayment and cancellation provisions in facility agreements

Published by a LexisNexis Banking & Finance expert

Practice notes

In real estate finance deals, the facility offered is typically a Committed facility, and the facility agreement specifies precisely how and when it must be repaid. That agreement will also indicate:

whether the borrower may repay before the scheduled repayment date(s) (that is, make voluntary Prepayments), together with any conditions for such prepayments, including threshold sums or charges, and
whether any circumstances trigger an obligation on the borrower to repay all or part of the facility ahead of schedule (that is, make mandatory prepayments)

Many provisions on voluntary and mandatory prepayment, repayment and cancellation in a standard syndicated loan facility mirror those used in a real estate finance context. For further detail, see Practice Note: Repayment, prepayment and cancellation. This Practice Note explores the voluntary and mandatory prepayment, repayment and cancellation terms that may apply specifically to real estate investment finance or development finance transactions...

Where to start with drafting repayment, prepayment and cancellation provisions in a real estate finance transaction

The repayment, prepayment and cancellation provisions for a given transaction are ordinarily settled at term sheet stage...

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Web page updated on 21/05/2026

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