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break costs

Discussion in 'Property Finance' started by HomeMinister, 16th Sep, 2016.

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  1. HomeMinister

    HomeMinister Well-Known Member

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    Melbourne
    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.
     
    Perthguy likes this.
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    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
     
  3. HomeMinister

    HomeMinister Well-Known Member

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    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?
     
  4. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    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 :)
     
  5. Redom

    Redom Mortgage Broker Business Member

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    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 +).
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Considered the tax issues?
     
  7. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Perth
    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.
     
  8. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Location:
    Adelaide, SA
    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.