Waiving of fixed interest break costs

Discussion in 'Loans & Mortgage Brokers' started by JK200SX, 1st Apr, 2020.

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  1. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I can not.

    Commercial In Confidence to CBA

    ta
    rolf
     
  2. KingBendtner

    KingBendtner Well-Known Member

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    Location:
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    CBA
    Investment loan at $409k
    Current loan 3.84% IO - fixed until November 2020
    Current monthly repayment $1,250

    Breakout fee quoted at $1,300

    New loan quoted at 2.89% IO - fixed for 1 year
    New monthly repayment $1,000

    Seems like a no brainer to me.
    Within 5-months+ we will break even, then save for the next 7 months.
    Anything I might have missed?
    Any inputs are much appreciated.
     
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  3. Never giveup

    Never giveup Well-Known Member

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    Hi @KingBendtner , How long was it fixed for ?
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The fee may be deductible too if its relates to investment income. This coud give a marginal tax refund benefit at 30 June 2020. say 35% x $1300 = $455 more refund. Net cost is $845
     
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  5. KingBendtner

    KingBendtner Well-Known Member

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    Hey mate, it was fixed last year November, for 12 months.
     
  6. Shazz@

    Shazz@ Well-Known Member

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    That’s a pretty good fixed rate for IO
     
  7. Scyth

    Scyth Active Member

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    Break costs rebate would be terrific!

    Any updates from your mobile lender
     
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  8. Clive Palmer's Yacht

    Clive Palmer's Yacht Well-Known Member

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    It's theoretically possible to embed economic break costs on an interest rate swap into a new deal - ie you "blend and extend". Happens in the corporate banking space. You might be stuck paying a 4% fixed rate with 12m to run, and lender is offering 2.5% for 2 years. They'd embed the break cost into the new deal, so you'd end up paying a "blended" rate of ~2.9% for the duration of the new deal, starting now.

    Prob too much hassle (and operational risk) to offer something similar to resi home loan customers unfortunately.
     
  9. Sydboyz

    Sydboyz Active Member

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    I am in similar position as you. 8k break up cost and 4k rebate with 6 months left.
    Have you calculate the interest saving with 6 months left? Or maybe delay settlement so you only have few months left therefore lower break up cost.
     
  10. milobear

    milobear Well-Known Member

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    The interest saving for the remaining 8 months would be about $4700 assuming I get 1% lower rate.

    Break cost: $8000
    General refinancing cost will be approximately $1500

    Given my loan is with St George, I can't refinance to Westpac for the rebate. So that leaves me with the other Big 4 - which valuation/serviceability will probably be an issue for my situation.

    Assume I can refinance out to the other banks, I think they only offer $3000 at the moment, but lets assume I can get $4000.

    Break cost: $8000
    Refi cost: $1500
    Interest saving: $4700
    Rebate: $4000

    I'll be out of pocket about $800. Apply deduction here. Net cost $488.

    This is only rough calculations. But if it isn't going to provide me a significant saving, then I think I'll just leave it as is.

    In my opinion, delaying settlement may increase break cost, as fix rate comes down the spread widens.
     
  11. KingBendtner

    KingBendtner Well-Known Member

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    Hi @Big Lez , any updates from your mobile lender?
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Id be surprised, because if the do it for 1..................

    ta
    rolf
     
  13. Observer

    Observer Well-Known Member

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    So if I have a fixed INV loan the break fee is basically tax deductible at my tax rate (e. g. 37%) at 30 June 2020? That’s a nice discount, would make sense then to break and refix some of my investment loans.
     
  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If your loan has been used to invest the break costs would be deductible in some stuations, not all:

    Tax Tip 131: Breaking a Fixed Loan – 3 Different Tax Consequences https://propertychat.com.au/community/threads/tax-tip-131-breaking-a-fixed-loan-3-different-tax-consequences.11168/
     
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  15. Big Lez

    Big Lez Well-Known Member

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    I will be chatting to them tomorrow. Just was too busy with work last week.
     
  16. ozwanderlust

    ozwanderlust Well-Known Member

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    Hoping someone can help us on the most effective ways of contacting CBA. We are currently overseas - cannot call phone numbers starting 13 xx xx. We tried to contact CBA via email to our premier relationship manager (PRM) about fixed rate loans, but it seemed like we no longer have a PRM :mad: We tried to call CBA but like most have reported the waiting time has been hours! We will try to call a branch this week - problem is our loans have been with a branch in Sydney city, but when our previous PRM moved, they assigned us a new PRM at an inner west branch where we do not do our banking.
    Can anyone confirm that CBA no longer has PRM? - The name of our PRM used to be listed on the bank statements, but no longer.
    Is there anyway to send CBA a secured email via account login, and hopefully someone will read the email and reply? We cannot seem to find this feature with CBA accounts. With some banks / financial institutions we have been able to send secured emails via account logins and receive replies.
    Thanks in advance.
     
  17. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    On their front page at the bottom it has the various ways of getting in touch including the 132221 number.

    Right under that it says, "Overseas? Call +61 2 9999 3283".

    Unfortunately right now all the banks have long wait times.
     
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  18. meme plecko

    meme plecko Well-Known Member

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    So, after three hours and three minutes wait, I was told (as expected) that CBA can't waive the break fees (in my case 3.5k), so I will be looking at refinancing with ANZ as that resets the loan to 30 years and their 4k cash back will cover the fixed loan break fee. Getting reasonable valuation right now is an entirely different story..
     
  19. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Valuer shop

    ta
    rolf