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Prepayment Penalty Calculator

Work out prepayment penalty instantly with clear inputs, formula shown and shareable results.

About Prepayment Penalty Calculator

A prepayment penalty is a percentage of the balance repaid early. Comparing it with the interest that would otherwise accrue — and expressing it as the number of months of interest it equals — makes the decision straightforward.

Formula

Break-even

Break-even months = penalty / (balance × monthly rate)

Worked example

With the default values below, Prepayment Penalty Calculator returns Net Saving After The Penalty of $329,454.46. Change any input above and every figure here is recalculated in your browser.

Inputs used

Outstanding Balanceminimum 0
1,200,000
Prepayment Penaltyaccepts 0–10 %
3 %
Annual Interest Rateaccepts 0–100 %
11 %
Months Remainingaccepts 1–360
60

Results

Net Saving After The Penalty
$329,454.46
Prepayment Penalty
$36,000.00
Future Interest Avoided
$365,454.46
Months Of Interest The Penalty Equals
3.3

Step by step

  1. 1Values used
  2. 2Break-even
  3. 3Net Saving After The Penalty= 329,454.46
  4. 4Prepayment Penalty= 36,000.00
  5. 5Future Interest Avoided= 365,454.46
  6. 6Months Of Interest The Penalty Equals= 3.3

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or fees or charges into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.

Frequently Asked Questions

How is the penalty usually set?

A flat percentage of the amount prepaid, sometimes tapering with the years elapsed, and often waived after a lock-in period.

Can the penalty be negotiated?

Frequently yes, particularly if you are refinancing with the same group or repaying from your own funds.

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Prepayment Penalty Calculator | Calcrivo