The prepayment penalty math on my commercial loan shocked me

I was shopping around for a small commercial property loan in Columbus and almost signed with a lender that had a 3% prepayment penalty for the first 5 years. On a $250,000 loan, that's $7,500 just to pay it off early if I sold the building. I ran the numbers with my accountant and realized a slightly higher interest rate with no penalty would save me money if I plan to sell within 3 years. Has anyone else gotten burned by these hidden penalty clauses when refinancing?

1 comments

1 Comment

troy8321mo ago

3% is pretty standard, hardly worth losing sleep over.