break costs

hi all planning to break my fixed loan. kindly can you help identify any hidden surprises?

my break fee came upto close to 2k. i will recover this in 6 months time if i contnue my present high fixed rate.

 

Are you refinancing to another lender?

If so - there's also a discharge fee from your current lender (that might have been included the $2k payout quote), state govt. fees (usually around $300) and an application fee with new lender (if applicable)

Cheers

Jamie

 

yes jamie going to another lender CBA. its pain to fathem how 2k was calculated but seems reasonable to me. i expected 10k or something but doesnt look like it anymore. can you say way?

 

You may be eligible for a refinance rebate if going to CBA - will cover some of the cost.

Pretty reasonable break cost. Some of them have more 0s

 

The actual break cost will partially depend on the difference in current rate vs your rate, and length of time till expiry.

Other refi costs usually amount to around 700-1000 - CBA will cover $1250 in most circumstances at the moment (250k loan +).

 

Considered the tax issues?

 

Yep, the difference between the current variable rat v your fixed rate as well as time left to run on your fixed rate term.

I believe the formulae vary from bank to bank.

 

Break costs are a calculation which takes into account the fixed rate vs current rate available, loan balance, time remaining on the fixed term etc. In general terms, the smaller the variance in rate, debt owing and time remaining on fixed rate, the lower the break cost.

In terms of 'hidden surprises' - outgoing lenders discharge fees, government registration/de-registration fees, overall you generally come out with change from $1,000. You'll receive a rebate from CBA for $1,250 if it has been negotiated so you will likely come out ahead.