A prepayment penalty is a fee charged when a loan is paid off earlier than originally scheduled. While this fee is designed to compensate the lender for expected interest, understanding the cost ahead of time can help you evaluate whether paying off your loan early makes sense for your business.
Our Prepayment Penalty Calculator gives you a quick estimate of the total cost to pay off your loan on a specific date. This can help you make informed decisions when considering options such as refinancing, selling a property, or restructuring your financing.
As your loan approaches maturity, the calculator will appear on the Loan Details page.
How to Generate a Prepayment Estimate
Select the reason for your prepayment inquiry.
Choose the date you are considering paying off the loan.
Confirm that you understand the results are an estimate only.
Click Calculate Prepayment Estimate.
Your estimated payoff details will appear below the calculator.
Understanding Your Results
Your estimate will include:
Principal: Your current loan balance.
Percentage of Principal Balance: The penalty rate applied to the remaining principal.
Prepayment Premium: The calculated premium amount based on the applicable penalty structure. In this example it is a percentage of the current principal balance.
Final Month of Interest: Interest accrued through your selected payoff date.
Processing Fee: Our standard payoff processing fee.
Reviewing these components can help you understand the total estimated cost to pay off your loan early, allowing you to compare that cost against potential benefits such as refinancing savings, property sale proceeds, or other financing opportunities.
Fee Types Can Vary
Prepayment terms can differ depending on the structure of your loan. The calculator will reflect the applicable prepayment type associated with your loan.
Yield Maintenance
Yield maintenance penalties are designed to compensate the lender for interest they expected to receive over the remaining term of the loan. Treasury rates are used as a benchmark to estimate the lender’s lost yield. Because the calculation depends on current market rates and the remaining loan term, the estimated penalty may vary based on the payoff date selected.
Lockout
Some loans include a lockout period during which prepayment is not permitted. If your loan is currently in a lockout period, the loan cannot be paid off early and the calculator will indicate that prepayment is not available for the selected date.
Full Payoff (No Penalty)
Certain loans allow full repayment without a prepayment penalty during specific intervals.
The results of the calculator are only an estiamte. To request a formal payoff quote, please contact your Loan Administrator.