Prepayment Window Calculator

Prepayment windows open after lockout. This calculator finds the optimal window.

Balance

Current month

Lockout end month

Current penalty %

Open window month

Current penalty $

$150,000

Months to open window

5 yr

Monthly penalty decline $

$2,500

How the math works

Current penalty = balance × current penalty %. Months to open = open window − current.

Calculate refi economics monthly during declining prepay windows. Each 30 days of patience can save 0.25-1.0% of balance in avoided penalty. Commercial borrowers often refi at the first-eligible date and lose that optionality; waiting 90-180 days for the penalty to drop can pay for its delay.

How to Use

Enter loan balance.
Enter current month of loan.
Enter lockout end month.
Enter current penalty %.
Enter projected open window month.
Read optimal prepay timing.

Frequently Asked Questions

Typical penalty curves?

5-4-3-2-1: penalty drops 1% per year (5% year 1, 1% year 5, 0% year 6+). Yield maintenance: penalty = interest rate differential × remaining term. Defeasance: buy-in of government securities to cash flow match. Each different economics.

When to refi in window?

Open window (no penalty) is optimal. Before open window, refi only if rate savings exceed penalty + transaction cost. Calculate penalty at current month, not original terms — declining curves reduce penalty over time.

Open prepay clauses?

Last 3-6 months of term often open prepay. Use for refi timing. Some loans allow 20% annual curtailment without penalty. Build prepayment flexibility into note at origination if exit uncertain.

How do insurance carriers view this?

Insurance carriers underwrite per-peril and often stack deductibles — named storm, wind, hail, flood, and standard can all apply separately on a single event. Confirm with your broker which deductibles actually apply to your policy and stress-test liquidity against the highest applicable deductible. Endorsements and riders can modify base terms; read declarations carefully and keep a written summary on file for claim time.