Yield Maintenance: A Back-of-the-Envelope Shortcut

Yield maintenance is a common prepayment provision with commercial real estate loans. It ensures the lender is made whole if you pay off a loan early by comparing your note rate against the Treasury rate for the remaining loan term.

The official calculation can be complex, but here’s a quick way to estimate:

• Take your note rate, say 6.00%

• Subtract the corresponding Treasury rate for the remaining term, say 3-year Treasury ≈ 3.70%

• That spread (2.30%) × the years left on yield maintenance (3) = 6.90%

• Multiply your loan balance by that percentage = Your Estimated Penalty

Want to run the numbers yourself? Try our Yield Maintenance Calculator below and see your potential penalty instantly.

Calculate Your Yield Maintenance Penalty