Finance category

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Yield Maintenance Calculator

Commercial mortgages commonly carry yield maintenance — a make-whole prepayment penalty that compensates the lender for interest they would've earned. Penalty = PV of lost interest at current treasury + spread. This calculator sizes the exit cost at any prepayment date.

Remaining principal

Loan rate

Months remaining

Current treasury rate (matching term)

Spread over treasury in YM formula

Yield maintenance penalty

$81,170

Total payoff (principal + YM)

$2,581,170

Penalty as % of balance

3.25%

Rate shortfall (loan − reinvest)

1.00%

Annual interest shortfall

$25,000

Reinvest yield (treasury + spread)

4.25%

How the math works

On $2.5M balance with 42 months remaining at 5.25% loan rate and 4.25% reinvest yield (treasury 4% + 0.25% spread): rate shortfall 1% × $2.5M = $25K/yr × 42/12 = $87.5K undiscounted. PV at reinvest yield drops it slightly: ~$84K penalty, 3.4% of balance.

If treasury rose to 5.25% (making reinvest yield 5.5%), shortfall would be negative and YM floored at zero. Watch the treasury curve when planning a refinance of a YM loan.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Yield Maintenance Calculator is built to give a quick, browser-based estimate for yield maintenance. Commercial mortgages commonly carry yield maintenance — a make-whole prepayment penalty that compensates the lender for interest they would've earned. Penalty = PV of lost interest at current treasury + spread. This calculator sizes the exit cost at any prepayment date. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the yield maintenance result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this yield maintenance estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter remaining principal, loan rate, and months remaining on the current term.
Enter the current treasury rate for a term matching remaining months (roughly).
See the PV-of-lost-interest penalty and total payoff amount.

Frequently Asked Questions

When do I pay yield maintenance?

Any time you pay off early — refinance, property sale, or voluntary paydown. Often waived in the last 3-6 months of term (open-to-prepay window). CMBS and insurance-company loans typically have YM; banks sometimes use step-down penalties instead (5/4/3/2/1%).

What's defeasance vs YM?

Defeasance is a securities-backed substitute: buyer of the loan gets a portfolio of Treasury securities matching the loan's remaining cash flows. More complex and expensive to execute but sometimes required by CMBS loan docs. YM is a cash payment to the lender.

How do I minimize YM?

Wait for the open-to-prepay window. Sell the property with loan assumption instead of payoff. Time refinance to late in term. Negotiate YM cap at loan origination (e.g., 'YM or 3% of balance, whichever is less').

Can YM ever be zero?

Yes — if current treasury + spread ≥ original loan rate, the make-whole is zero or negative. In rising-rate environments, YM can be trivial. In falling-rate environments (like 2019-2021), YM spiked to 5-15% of balance.