Understand and calculate potential pre-payment penalties on your mortgage or loan with our easy-to-use tool. Avoid unexpected fees when paying off debt early and plan your finances effectively. Get an instant estimate to save money on your loan.
Formula:
A prepayment penalty is typically calculated in one of two common ways:
- Percentage of Outstanding Balance:
Prepayment Penalty = Remaining Principal × (Penalty Percentage / 100) - Fixed Number of Months' Interest:
Prepayment Penalty = Remaining Principal × (Annual Interest Rate / 12) × Number of Months
Where:
- Remaining Principal: Your current outstanding loan balance.
- Penalty Percentage: The specified percentage of the principal charged as a penalty (e.g., enter 2 for 2%).
- Annual Interest Rate: Your loan's annual interest rate (e.g., enter 5 for 5%).
- Number of Months: The number of months' interest used to calculate the penalty.