Rate Lock Breakage Calculator

Rate locks carry breakage fees when loans don't close. This calculator sizes the fee.

Locked rate %

Current market rate %

Lock amount

Months remaining

Breakage fee

$8,000

Rate gap (bps)

Fee (bps of lock)

6.7

How the math works

Fee = lock × (locked rate − market rate) × remaining lock period ÷ 12. Zero when market ≥ locked.

Lender's actual hedge cost is the math floor; contracted fee may add admin charge. Always request lender's breakage computation in writing before committing to abandonment.

How to Use

Enter locked rate.
Enter current market rate.
Enter lock amount.
Enter months remaining on lock.
Read breakage fee.

Frequently Asked Questions

When applied?

Deal falls through, sponsor changes terms beyond materiality threshold, closing delayed beyond lock expiration. Some lenders waive small-delay breakage; large delays or full abandonment trigger fee.

Fee structure?

Typically present value of (locked rate − market) × balance × remaining lock period. Zero when market rate ≥ locked rate (lender benefits from abandonment). Positive when market dropped.

Negotiating?

Extend lock with partial rate adjustment rather than breaking. Most lenders prefer extension to breakage claim. Small closings delays (1-2 weeks) often forgiven if deal consummates.

How does this interact with the rest of the capital stack?

Each tier of the stack affects the next. Senior debt constrains LTC and DSCR. Mezz and pref consume equity spread. Interest rate hedges protect DSCR but cost premium. Always model the full stack holistically — optimizing one tier alone often degrades another. Institutional underwriters run three or four scenarios across the stack before committing capital.