Exit Fee
A fee charged by the lender when a loan is paid off before the scheduled maturity, typically a percentage of the outstanding balance.
Definition
An exit fee is a payoff charge due when the borrower retires the loan early—often around 1% of the unpaid principal, though the amount and triggers are deal-specific. It is distinct from a scheduled prepayment-penalty schedule, though some term sheets use the labels together or interchangeably. Lenders may waive or reduce the exit fee if the borrower refinances with the same institution, because the bank keeps the relationship and redeploys capital into a new loan. Borrowers should model exit fees alongside PrePay language when underwriting a hold period shorter than the loan term.
Example
A borrower refinances a $900,000 balance before maturity. A 1% exit fee equals $9,000. The bank waives it because the new loan stays with the same lender.
See Also
Occasional updates, worth reading.
New tools, technology, and occasional small bay and flex industrial industry updates.