What is step-down prepayment penalty?
A prepayment fee that declines over the loan term, for example 5%, 4%, 3%, 2%, then 1% in successive years.
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.