An “or more” clause is a clause in a promissory note that grants the borrower the right to make additional payments or pay off the loan in its entirety at any time and without penalty.
In the mortgage industry, some notes have a prepayment penalty buried in the document. A prepayment penalty is a fee that is charged if you pay off your house faster than the term of the loan—because of refinancing, selling, or prepaying payments.
A soft prepayment penalty allows the borrower to sell the home without a penalty, but penalizes the borrower if the home is refinanced. A hard prepayment penalty penalizes the borrower whether the home is sold or refinanced.
The “or more” clause is an essential clause in any mortgage agreement. It prevents the mortgage company from charging any penalties if the borrower wants to make extra payments or sell the house before the term of the loan expires. The “or more” clause also protects borrowers against prepayment penalties when refinancing the home (because of lower interest rates, for example).