Loan Prepayment Penalty Calculator

Works out the fee for repaying a loan before it ends and compares it with the interest saved by repaying early or by moving to a cheaper loan. It also shows when the fee period ends.

How to use

1. Enter the "Amount you repay early", choose "How the fee is worked out" and enter the "Prepayment fee rate".
2. Enter the "Loan start date", "Loan end date", "Repayment date" and "Fee period"; the fee and "How it was calculated" appear.
3. Under "Is paying early worth it", choose the "Repayment type" and enter the "Rate of the new loan (annual)" and any "Other refinancing costs".
4. Compare the net gain and break-even month for "Repay early" and "Refinance with a new loan".

How it works

• Prorated by time left: amount × fee rate × days left in the fee period ÷ days in the fee period. The period runs from the start date for the length you enter, or to the loan end if sooner.
• Flat percentage: amount × fee rate. Months of interest: amount × loan rate × months ÷ 12. Both are zero after the fee period.
• Interest saved assumes a loan of the repaid amount over the remaining months at the same rate and repayment type. Formulas and rates differ between lenders; check your loan agreement.

Questions and answers

How is a prepayment penalty calculated?

Common forms are a percentage of the amount repaid, some months of interest on it, or a percentage that shrinks with the time left. Six months of interest on 200,000 at 6% is 6,000.

When does the prepayment penalty end?

When the fee period in your agreement ends. Enter it in "Fee period" and the page shows the end date and the days left.

Is it worth paying a fee to repay a loan early?

On the numbers alone, yes when the interest saved is larger than the fee. "Break-even" shows the month in which the interest saved so far passes the fee.

When does refinancing not pay off?

When the interest saved by the lower rate is smaller than the fee plus the new loan's costs. The less time left on the loan, the harder that is.