A payoff letter provides instructions on how to pay off a loan with a lump sum before the loan term ends. Learn how payoff letters work.This is an example of a payoff letter used in a syndicated loan transaction. This payoff letter (including the defined terms such as Lenders,. A 10 day payoff is crucial to getting your old loans paid off during a refinance. Learn how it works from start to finish. A mortgage payoff letter can come in two forms. One form tells borrowers the remaining principal amount and interest they have to pay to close out the loan.