What is yield maintenance?
A prepayment premium designed to preserve the lender’s expected yield. On early repayment the borrower pays principal, accrued interest, and a premium generally based on the present value of the lender’s lost interest income relative to a benchmark rate.
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.