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Anz exit fees wtf

Discussion in 'Property Finance' started by 1stepcloser, 9th Aug, 2016.

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  1. 1stepcloser

    1stepcloser Member

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    I have 2 fixed loans till june next year @ 5.05%. 250k & 266k and lady just told me i am looking at about 8g per loan to break it is she for real???

    Speaking to someone else next week at the bank.

    Thanks Matt.
     
  2. pinkboy

    pinkboy Well-Known Member Premium Member

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    Welcome to breaking fixed rates.

    pinkboy
     
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  3. Marg4000

    Marg4000 Well-Known Member

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    Yes, she is most certainly for real.

    Interest rates have come down since you fixed your loan, so there will be a charge to break the loans. It will be up to you to work out whether it is an economical decision.
    Marg
     
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  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I haven't crunched the numbers but fixed rates have dropped by quite a bit.

    Cheers

    Jamie
     
  5. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    That's the issue with fixed rates, if there's a significant drop between the new cost of funding vs your lock in rate, you effectively have to pay the difference upfront for the remaining term of the fix - which is how you get large costs like you've been quoted.

    Doesn't matter who you talk to at the bank, it's going to be the same. Figures are recalculated daily, so if rates drop further the break fee may well rise even more.
     
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  6. Joynz

    Joynz Well-Known Member

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    I am very surprised that anyone signing up for a fixed loan would have missed this.

    There is a lot of info. around, not least the info that comes with the loan.
     
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Meh. $8k is nothing. I got quoted $52k of a $300k loan when they dropped after the GFC.

    You'll usually find the cost of breaking far exceeds the saving on the lower rates, unless the rates keep on going down.
     
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  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    You'd be surprised how many people don't know it, or perhaps they choose to ignore it when things don't go their way...
     
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  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Biggest break cost that i have come across was for $90k.

    Dont forget it may be deductible plus you could get ongoing savings.
     
  10. Sonamic

    Sonamic Well-Known Member

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    An Exit Fee is different to a Breaking Fee, technically. Though they may try and charge you an Exit on top of the Breaking also. I had one at 200k once that I locked in, Break Fees were in the vicinity of 30k for a while.

    Best just ride it out and learn.
     
  11. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Hedge your bets and go 50/50 fixed/split or a similar ratio to suit your particular scenario.

    I reckon fixed rates are going to continue a downward trend as well as variable so Im thinking to hold the horses on fixed rates ATM.
     
  12. Perthguy

    Perthguy Well-Known Member

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    You need to read the contract and then have a good broker to explain it to you. I always go through the entire contract with my broker... just in case I missed something. The number of people who sign a contract without reading it is worrying.
     
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  13. Redom

    Redom Mortgage Broker Business Member

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    That is a bit on the high side - not quite sure how they calculated that, so its probably worth asking for a second opinion.

    Taking a few educated guesses here, its about 1% higher than current rate, with 9 months to go (0.75 of one year) and ~$516k worth of debt. Those are the main inputs that go into a break cost calculator. There not very transparent with this but it should be far below $16k. I'd guesstimate closer to 6-8k in total.
     
  14. WattleIdo

    WattleIdo renovating Premium Member

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    Wow makes me so glad I'm with my bank. As @Corey Batt has said the fees change every day so it could work your way to pester them every couple of days or it could go against you.
    I have found that after the interest payment goes in, wait a few days and then go for it. Don't ask me why.
    They're now talking about rates going even lower next year but who knows with these things. With only 9 months to go, I'd be more likely to wait and then fix again in 9 months.
    Or choose a bank which will charge you 1K max, $0 min.
     
  15. S0805

    S0805 Well-Known Member

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    That makes me feel little better...paid 12K just after GFC. learned the lesson always leave part in variable...
     
  16. albanga

    albanga Well-Known Member

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    Still waiting on that good fixed rate storey.
    Maybe when I'm 80 I'll hear it.

    @Redom, before you say it, I disagree :p
     
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  17. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Here's one. In 2005 I fixed for 3 years at 6.2%. Rates started going up and by 2008 they were about 9.5%.

    I was quite ahead over the entire 3 years, but was getting nervous as my repayments were about to seriously jump by over 3%, which they did.

    2 months after they reverted to variable, rates started coming down. 4% over 4 months. That property pretty much ignored the entire GFC. :)

    Unfortunately another one took the brunt of it, which is were the $50k payout figure came from. Across my entire portfolio, across almost 2 decades, I'm probably about even on fixed rates.
     
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  18. albanga

    albanga Well-Known Member

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    See you nearly had me until the other break came in and evened it out! Sorry Peter that still doesn't qualify as a feel good fixed rate story :p

    If I had to guess I would say the pain of paying a 50k break was worse than the feeling of beating the banks on the fix?
     
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  19. Scott No Mates

    Scott No Mates Well-Known Member

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    Rates Fixing is just the substitution of one risk for another and hoping that you're smarter than the banks, economists, forecasters, actuaries, RBB board, the market, punters & the taxi driver.
     
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  20. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Yeah, that's fair.

    On the other hand, when I fixed that one that went badly, I knew I could manage the repayments at that fixed point. I could afford what the repayments were a few months later and I was ahead for a significant amount of time. The point where the payout was $50k was at the other extreme end. Overall that one was a modest amount behind, the one that went well was quite a winner. Overall about even.

    On the other had, we were generally under financial stress at the time (new business, bad economy). Had I not fixed those loans, I might have lost one of those properties. That makes the decision to fix quite justifiable. My real regret was fixing for 5 years rather than 3. Most bad times worth themselves out reasonably quickly, 5 years is too long to fix IMO.