Swap Breakage Calculator

Unwinding an interest rate swap mid-life triggers breakage cost. This calculator estimates the unwind value based on rate moves and time remaining.

Swap notional

Fixed rate paid

Current market rate

Years remaining

Discount rate

Breakage value (+ = you pay)

-$649,422

Spread (fixed − market)

-150

bps

Annual $ spread

-$150,000

How the math works

Breakage value = PV of (fixed − market) × notional over remaining years. If spread is positive, you pay; negative, you receive.

Swap breakage is identical in concept to yield maintenance on prepayment — lender recovers the lost yield via cash now. Sized in bps, not rate terms.

How to Use

Enter swap notional.
Enter fixed rate paid.
Enter current market rate.
Enter years remaining.
Read estimated breakage cost.

Frequently Asked Questions

When does breakage apply?

Any time you want to unwind a swap before maturity — refi, sale, or just hedging exit. Breakage can be huge if rates moved significantly against your hedge.

Cost or gain?

Depends on direction. If your fixed rate > current market rate, you pay breakage (you locked in unfavorable rate). If fixed < market, counterparty pays you.

How to avoid?

Match swap tenor to loan tenor. Build in early-unwind optionality (swaption). Or accept breakage as part of the refi economics — sometimes cheaper than continuing.

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.