fixed rates - exit fees

[tj22]

how much generally does it cost to get out of a fixed rate home loan?

does it go on how much you borrowed?

etc 300k loan, 500k loan?'

i'm only after ball park figures.

 

[pinkboy]

Call your lender. It will vary greatly!

pinkboy

 

[jpcashflow]

Hi Tj22,

Call your lender they should be able to get you an exact figure.

Whats the reason for looking at changing?

 

[Jamie M]

Generally depends on the rate, remaining term and loan amount. Your lender will give you a payout figure over the phone - they are the only ones that can give you an answer.

Cheers

Jamie

 

[datto]

The lower rates go, the higher the exit fees. Correct me if I'm wrong.

 

[tj22]

this is just a scenario i'm trying to figure out, i don't actually have fixed rates.


loan 1. 500k owing 5.3% p.a fixed for 3 years starting from today

loan 2. 130k similar interest rate fixed 3 years from today


how much would the exit fees roughly cost?

 

[unloadmymind]

The lower rates go, the higher the exit fees. Correct me if I'm wrong.

Yes, because they have to re-lend the loan to another customer at a lower rate!

 

[unloadmymind]

this is just a scenario i'm trying to figure out, i don't actually have fixed rates.


loan 1. 500k owing 5.3% p.a fixed for 3 years starting from today

loan 2. 130k similar interest rate fixed 3 years from today


how much would the exit fees roughly cost?

it depends on difference in the wholesale cost of funding at the time of (a) taking the loan and (b) breaking it, multiplied by the numbers of years left in the term.

in other words, no one knows until it happens.

 

[Rolf Latham]

this is just a scenario i'm trying to figure out, i don't actually have fixed rates.


loan 1. 500k owing 5.3% p.a fixed for 3 years starting from today

loan 2. 130k similar interest rate fixed 3 years from today


how much would the exit fees roughly cost?

my guess is 19 k

ta

rolf

 

[datto]

This sounds like some kind of trick question.

line one you state you don't have fixed yet line 2 and 3 state that the rates are fixed.

I hate customer service jobs for this reason. I'd rather be a copper and bash the truth out of someone lol

 

[tj22]

my guess is 19 k

ta

rolf

Thanks Rolf

 

[tj22]

This sounds like some kind of trick question.

line one you state you don't have fixed yet line 2 and 3 state that the rates are fixed.

I hate customer service jobs for this reason. I'd rather be a copper and bash the truth out of someone lol

its a scenario

 

[tj22]

Generally depends on the rate, remaining term and loan amount. Your lender will give you a payout figure over the phone - they are the only ones that can give you an answer.

Cheers

Jamie

have you had any experiences in the past with exit fees jamie? i'm just trying to get an idea of what i'd be looking at if had to brake a fixed rate

 

[unloadmymind]

my guess is 19 k

ta

rolf

where did you get that from?

if interest rates go up, potentially the exit fee is zero.

no one knows the future interest swap rates.

 

[Marty McDonald]

Really rough .....Loan amount x (fixed rate - current fixed rate same period + 1%) x term remaining.

Eg $500k x 1.3% x 3 yrs = $19,500.

That is probably overstating it but basically loan amount multiplied by the change in wholesale fixed rates (banks cost of funds) plus the banks profit margin forgone multiplied by term remaining.

 

[unloadmymind]

Really rough .....Loan amount x (fixed rate - current fixed rate same period + 1%) x term remaining.

Eg $500k x 1.3% x 3 yrs = $19,500.

That is probably overstating it but basically loan amount multiplied by the change in wholesale fixed rates (banks cost of funds) plus the banks profit margin forgone multiplied by term remaining.

that's strange . . . in most fixed rate terms and conditions i've read the bank don't add the profit margin.

and where did you get the 0.3% from?

 

[Marty McDonald]

Not strange. The profit margin is built into their cost of funds. This is why there is a break cost.

0.3% rough difference between 5.30% in example and average 3 year fixed rate now in the market. Yes I know there are loads cheaper. Example only.

 

[Rolf Latham]

where did you get that from?

if interest rates go up, potentially the exit fee is zero.

no one knows the future interest swap rates.

based on an exit cost broad brush of settling today and discharging tommorow, which is what im guessing the OP is asking


ta
rolf

 

[tj22]

based on an exit cost broad brush of settling today and discharging tommorow, which is what im guessing the OP is asking


ta
rolf

op? and yes that was what i was asking.

 

[Rolf Latham]

op? and yes that was what i was asking.

Op being

Original poster

Ta

R