Yield Maintenance


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.

BREAKING DOWN 'Yield Maintenance'

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

  1. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  2. Yield

    The income return on an investment. This refers to the interest ...
  3. Loan

    The act of giving money, property or other material goods to ...
  4. Encumbrance

    A claim against a property by a party that is not the owner. ...
  5. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  6. Capitalization Rate

    The rate of return on a real estate investment property based ...
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