Fixed rate break fee - waive?

Discussion in 'Loans & Mortgage Brokers' started by jodes, 24th Jun, 2019.

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  1. jodes

    jodes Well-Known Member

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    We are looking to upgrade our PPOR and are planning to stay at the same bank (which bank?).
    Because 80% of our loan is fixed, we've been told we have a $12k break cost. Is there any way we can structure our loan to avoid or lessen this break cost? (eg security substittuion or something)?
    (Side note: I understand why break fees are charged, so not questioning this, more to see if there is any way around this).
     
    jodes, 24th Jun, 2019
    #1
  2. The Y-man

    The Y-man Moderator Staff Member

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    I think they waive it if you go to a higher fixed rate.

    The Y-man
     
    The Y-man, 24th Jun, 2019
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    a port or sub may work well, but may actually end up being more costly than the 12 k for various reason including getting access to a lower cost product, not needing back to back or near back to back settlement etc

    Dont forget that with a port, you still make full loan repayments on the loan even if the money isnt used, since its used for security and you get like 1 % or less if any on a TD............

    Id say a full analysis of options is in order from the banker/broker is in order

    ta
    rolf
     
    Rolf Latham, 24th Jun, 2019
    #3
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I have seen some lenders waive break fees in certain circumstances, but never the CBA and not these circumstances unfortunately.

    The best you can likely to is a security substitution. It would be ideal to buy and sell the two properties a the same time to achieve this.

    If that's not possible, then it's going to take a bit of modelling to figure out what the best way to go about it will be. The challenge is it's difficult to give you options without knowing what the actual path will be with the properties.
     
    Peter_Tersteeg, 24th Jun, 2019
    #4