Prepayments

Understand, and shrink, the penalty for paying off early.

Prepayment penalties are often large, frequently miscalculated, and discovered too late. We verify the number from the loan docs and ensure your quote from the servicer is aligned with the actual requirement.

Yield maintenance, defeasance, and step-down structures each calculate the cost differently, and the number is often miscalculated, rarely in the borrower's favor.

The penalty deserves attention long before the payoff date. Built into the hold-sell-refinance analysis early, it can change the decision entirely, and because some penalties grow as rates move, the exposure itself can sometimes be hedged, using a swaption to cap a rising prepayment cost is a strategy we help borrowers consider.

We calculate prepayment penalties independently from the servicer, referencing the actual loan documents. If you're contemplating an upcoming prepayment, we'll review the loan documents and provide an estimate at no cost to you.