Mortgage Prepayment Penalty Calculator
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Guide
Mortgage Prepayment Penalty Guide
Lenders calculate prepayment penalties when extra principal exceeds annual contract allowances.
Formula
Penalty = Max(0, Prepayment - Balance * Allowance %) * (Rate / 12 * 6)Frequently Asked Questions
- What is the six month interest rule?
- Lenders charge 180 days of interest on principal prepayments exceeding 20 percent of the loan balance.
- Do standard conforming mortgages have penalties?
- Under federal rules, conventional qualified residential mortgages prohibited prepayment penalties after 2014.