Lock-In
In real estate finance, a lock-in is a provision in a mortgage or deed of trust that restricts or prohibits the borrower from repaying or refinancing the loan for a specified period of time. During this lock-in period, the borrower is effectively required to remain with the existing loan and its terms.
Lock-in provisions are commonly used by lenders to ensure a predictable return on the loan by preventing early payoff, which could reduce expected interest income. The restriction may be absolute or may allow prepayment only under certain conditions or with a penalty, depending on the terms of the loan agreement.
