Yield Maintenance Calculator
Estimate a commercial mortgage prepayment penalty
Yield maintenance is designed to compensate a lender for lost interest when a commercial loan is prepaid before maturity. This calculator estimates the present value of lost interest compared with a minimum penalty floor.
- ✓Estimates present value of lost interest
- ✓Compares calculated penalty against a minimum penalty floor
- ✓Shows estimated payoff amount including penalty
- ✓Useful for refinance and sale decision modeling
Frequently Asked Questions
What is yield maintenance?
Yield maintenance is a commercial loan prepayment formula intended to preserve the lender's expected yield when a borrower prepays early.
Why does the Treasury or reinvestment rate matter?
The lower the replacement yield, the more interest the lender is assumed to lose, which generally increases the penalty.
Is this the same as defeasance?
No. Defeasance usually substitutes collateral with securities, while yield maintenance is a prepayment premium formula. Loan documents control the actual result.
Related Tools
This tool is for educational purposes only. Results do not constitute a loan offer, pre-qualification, or guarantee of financing. Consult a licensed financial professional for advice specific to your situation.