Yield Maintenance

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Dictionary Says

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 Says

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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