What is prepayment penalty?
A fee charged on early payoff, often a declining percentage of the outstanding balance (e.g., 5-4-3-2-1). One of the standard commercial prepayment protections alongside lockout, yield maintenance, and defeasance.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.