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Prepayment Premium
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Prepayment Premium Calculation Model

Lenders often charge a premium when borrowers prepay the outstanding loan or when the contracted fixed interest rate is to be reduced. This premium is arrived at by computing the present value of the future notional interest loss that the lender suffers by agreeing to such prepayment or for reduction of interest rate as the case may be. This spreadsheet template can be used to readily calculate such premium on the fly.