Prepayment Penalty
A prepayment penalty is a fee specified in the loan agreement that a borrower must pay if they significantly pay down or completely pay off their loan before the end of its term.
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What is a Prepayment Penalty?
It protects the lender from the loss of anticipated interest income if the borrower refinances or sells the property early.
Common Features of Private Lending Software
Workflow Automation
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Ecosystem Integrations
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Why Prepayment Penalties Matter
Borrowers must consider these penalties when planning their exit strategies, as they can significantly impact the profitability of a real estate investment.
Promissory Note
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Unsecured Loan
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Guarantor
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Refinance
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Maturity Date
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After Repair Value
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