Yield Maintenance

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DEFINITION of 'Yield Maintenance'

A prepayment premium that allows investors to attain the same yield as if the borrower made all scheduled mortgage payments until maturity.

INVESTOPEDIA EXPLAINS'Yield Maintenance'

Yield maintenance premiums are designed to make investors indifferent to prepayment. Furthermore, It also makes refinancing unattractive and uneconomical to borrowers.

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RELATED FAQS
  1. What is the relationship between the current yield and risk?

    The general relationship between current yield and risk is that they increase in correlation to one another. A higher current ... Read Full Answer >>
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    In finance, a convertible bond represents a hybrid security that offers debt and equity features and risks. While a convertible ... Read Full Answer >>
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    Municipal bonds are backed by dedicated taxes or revenue sources related to specific projects, or by the full faith and credit ... Read Full Answer >>
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    The basic differences between the debt and equity markets include the type of financial interest they represent, the way ... Read Full Answer >>
  5. What do cities do with the funds generated from municipal bonds?

    Funds generated from the sale of municipal bonds may go to provide for unspecified, general government financial needs, or ... Read Full Answer >>
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