What is a prepayment penalty?
Published October 1, 2026 · 1 minute read
The answer
A prepayment penalty is a charge that may apply when a loan is repaid early under its terms. Conditions, periods, and calculation methods vary. It can affect refinancing or a sale, so review it before signing.
A low initial rate may be less attractive when exit costs are included. Ask the lender to show a worked example for your likely holding period.
Further reading
These resources provide additional context. Check the official rules and documents that apply to your own situation.
This answer is general education. Apply it to the property's actual location, agreements, and circumstances. Where a decision requires professional advice, use a qualified adviser.
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