What a takeout loan does
A takeout loan repays a short-term construction loan once the project is built, typically as a permanent or longer-term loan. Its rate is usually lower than the construction loan's, because the building risk has ended. How much you save depends on the balance, the two rates and how long you hold the new loan.
US loans are quoted as annual rates, so this page divides each by 12 and compares the two on the same balance and number of months, using the same interest method for both. Choose rolled up and compounded monthly, or paid monthly, to match your terms.
Rate, points and the all-in monthly cost
A lower rate can be offset by points and prepayment fees. They are shown as a percentage of the balance, and the all-in monthly cost adds them to the interest and divides by the balance and the number of months. It lets you compare a lower rate with more points against a higher rate with fewer. It is not an APR.
Worked example: taking out a $1,500,000 balance
A construction loan at 11% a year has $1,500,000 left to repay. A takeout loan at 8.25% a year, which is 0.6875% a month, repays it, held for 12 months with interest paid monthly. Interest on the takeout loan is $123,750.00.
One point is $15,000, so interest and points come to $138,750.00, an all-in 0.771% a month. Keeping the construction loan for the same 12 months would cost $165,000.00 in interest, so the takeout loan has $41,250.00 less interest than your current loan.
What this page leaves out
It compares interest and the points you enter. It does not size the takeout loan against the property's income or value, model amortization of principal, or check lender requirements. A permanent loan that amortizes has different monthly payments from the interest shown here.
To see the full cost of the construction loan, use the US construction loan calculator .
To see interest on construction draws, use the US construction loan interest calculator .
Use the right country page
This page stays in US dollars and uses US terms: a takeout loan, an annual rate and points. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK development exit loan interest rate calculator, which uses a monthly rate and an arrangement fee. The inputs reset and amounts are not converted.
Inputs for the takeout loan interest rate calculator
Construction loan balance to repay
What the takeout loan repays, including any accrued interest.
Current construction loan rate
The rate you pay now, not the APR.
Takeout loan rate
The rate on the new loan, not the APR.
Both rates quoted per
Year (nominal) divides annual rates by 12. Choose Month for monthly rates.
Time you expect to keep the new loan
Whole months. The current loan is priced over the same time.
How interest is paid
Rolled up and compounded monthly, or paid monthly. Used for both loans.
Origination fee (points)
A percentage of the balance, paid on the takeout loan. One point is 1%.
Prepayment or exit fee
A percentage of the balance, paid when you repay the takeout loan. Enter zero if none.
CALCULATOR QUESTIONS
US takeout loan interest rate calculator questions
What is a takeout loan?
A loan that repays a short-term construction loan, usually a longer-term or permanent loan taken once the project is finished.
Is a takeout loan cheaper than a construction loan?
Often the rate is lower because construction risk is gone, but points and fees matter too. Compare the all-in monthly cost rather than the rate alone.
How is the all-in monthly cost worked out?
Interest plus points and any prepayment fee, divided by the balance and the number of months. In the worked example it is 0.771% a month.
Does it matter how interest is paid?
Yes. Rolled-up interest compounds, which costs more than paying monthly at the same rate. The calculator uses the same method for both loans.
What happens when I change country?
The United Kingdom option opens the separate UK development exit loan interest rate page, in pounds, with monthly rates. Your inputs are reset rather than converted.