Calculators
Yield Maintenance Calculator
Estimate the cost of prepaying a fixed-rate multifamily loan before maturity. Yield maintenance penalties compensate the lender for lost interest income when a borrower pays off a loan early.
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Yield Maintenance Total Cost Estimate
This is an estimate only, based on standard yield maintenance methodology. Actual costs may vary depending on your specific loan documents, lender calculations, and applicable Treasury rates. Contact our team for a precise calculation.
Calculation Details
What is Yield Maintenance?
Yield maintenance is a prepayment penalty designed to make lenders whole when a borrower pays off a fixed-rate loan before its maturity date. It ensures the lender receives the same yield they would have earned had the loan remained outstanding.
The penalty is calculated as the present value of the difference between the note rate and the current Treasury rate for the remaining loan term, applied to the scheduled principal payments. When interest rates fall, the penalty increases because the lender loses more relative yield.
Yield maintenance is common in Fannie Mae, Freddie Mac, CMBS, and life company multifamily loans. Understanding this cost is critical when evaluating refinance opportunities or planning early disposition of an asset.