What is an Exit Fee?

exit fee commercial mortgageAn exit fee is most often used in a commercial mortgage or loan and it’s a fee that’s due at the time the loan is paid off, similar to points paid upfront, but an exit fee is paid at the time the mortgage or loan is the payoff.

What are Exit Fee Amounts?

Most of the time an exit fee can be a flat fee as an example 2% of the loan amount, but sometimes an exit fee can variable and can increase the longer the loan is outstanding. This is done to incentivize the borrower to execute their business plan and pay off the mortgage or loan when they say they are going to. As an example, there can be a 1% exit fee on a commercial mortgage, and if not paid off within 12 months it goes by .10 basis points every month.