The process of terminating a swap agreement by mutual consent of the parties at an early date before maturity. The party requiring buy-back has to pay the other party a lump-sum amount equal to the net present value of the swap at the time of termination. This usually involves the sale of the swap to the original counterparty. The compensation that a counterparty might have to pay to the other depends on how interest rates and credit spreads have changed since the conclusion of the swap.

It is also known as a cancellation of a swap or a swap close-out.