Taking a $16k hit - breaking fixed rate loan. Negotiation/anything I can gain?

[Richard Feynman]

Pending swap rate movements, I'm on the brink of breaking my CBA PPOR loan and copping a $16k fee.

Apart from a valuable lesson, is there anything I can gain from this situation?

e.g. Tell bank I'm breaking to refinance with another lender and negotiate a better variable rate if I stay, try my luck having account fees waived for the year or something else I haven't considered?

I'm hoping to draw upon the collective wisdom, experience and tactical brilliance floating about on Somersoft for some ideas.

I might be grasping at straws, but it doesn't hurt to check

 

[D.T.]

Get another lender to sign off on them paying all costs to relocate you to them

 

[willair]

Apart from a valuable lesson, is there anything I can gain from this situation?


I might be grasping at straws, but it doesn't hurt to check

Not much you can do ,or you could go out and buy CBA shares that's the only way I ever got all the interest back I paid them over 20 years..

 

[Richard Feynman]

Thanks.

Shoulda mentioned, total borrowings with CBA are:

$242k + $137k = $379k. With break fee included, $395k.

 

[Terry_w]

2 possible things.

1. Rent the house out before you break. Speak to your tax advisor about whether this would mean you could claim the break fee.

2. Take the opportunity to move to another lender that is offering a rebate for moving over. There are a few offering $1000 plus at the moment.

 

[Richard Feynman]

Thanks Terry.

2 is definitely an option.

Wonder if I can show CBA a deal from another lender and ask if they will match the incentive.

 

[Aaron_C]

$1k isn't much when we're talking about 16k...

 

[Terry_w]

Thanks Terry.

2 is definitely an option.

Wonder if I can show CBA a deal from another lender and ask if they will match the incentive.

It doesn't hurt to ask. They may give you a discount off the interest rate and/or cut a bit off the break fee - I have never heard of a bank waiving or reducing a break fee though.

$1k ain't much but it all helps.

 

[Brady]

$1k isn't much at all once you also take out discharge costs and de/registration of mortgage costs.

 

[Qlds007]

Agree with Aaron not sure i would run with a particular lender merely to get $1000 refunded on settlement and still be out of pocket for another $15,000.

 

[BV]

$1k isn't much when we're talking about 16k...

Exactly.
And why do u want to break the fixed loan anyway?

 

[Richard Feynman]

Thanks again folks.

I'm still just after ideas. As Terry said, $1k is nothing to turn your nose up at and it may give me some bargaining power.

BV, terrible rate, very lengthy term. I'm haemorrhaging money on unnecessary interest. If I break now the savings in interest, and ability to offset against the loan will cover the break cost in just a few years, and my servicability will increase significantly as a result - vital for my next purchase.

 

[jonmardell]

If you are going to break the fixed rate are you going to move to variable? or another fixed rate? If you are moving to variable you need to consider that the savings you might work out today might not actually be what you get over the fixed rate term you are breaking. An example is if you are on a 5 year fixed rate with 3 years remaining and break the rate to lock in for 3 years and there is a saving then it would be worth while but if you move to variable and rates go up what you might think you save over the period may end up costing you more. There are some refinance deals out there with St George at 1250 but you may want to see what cba can do first.

Pending swap rate movements, I'm on the brink of breaking my CBA PPOR loan and copping a $16k fee.

Apart from a valuable lesson, is there anything I can gain from this situation?

e.g. Tell bank I'm breaking to refinance with another lender and negotiate a better variable rate if I stay, try my luck having account fees waived for the year or something else I haven't considered?

I'm hoping to draw upon the collective wisdom, experience and tactical brilliance floating about on Somersoft for some ideas.

I might be grasping at straws, but it doesn't hurt to check

 

[r3ckless]

If you are going to break the fixed rate are you going to move to variable? or another fixed rate? If you are moving to variable you need to consider that the savings you might work out today might not actually be what you get over the fixed rate term you are breaking. An example is if you are on a 5 year fixed rate with 3 years remaining and break the rate to lock in for 3 years and there is a saving then it would be worth while but if you move to variable and rates go up what you might think you save over the period may end up costing you more. There are some refinance deals out there with St George at 1250 but you may want to see what cba can do first.

+1 THIS Has been the most informative post yet. Cba will not waive the era in full. At the rarest of times they can look at reducing the the era. U do need to show reasons why they should reduce it. Ie your debt position with tbe bank etc. The only way i can see getting a lower era is speaking to cba. Getting on of their amatuers either over the phone or in a branch to advise of alower or no era. Record it and fight with that against bank error. ...... get my drift?

 

[BV]

BV, terrible rate, very lengthy term. I'm haemorrhaging money on unnecessary interest. If I break now the savings in interest, and ability to offset against the loan will cover the break cost in just a few years, and my servicability will increase significantly as a result - vital for my next purchase.

It seems as a terrible rate today but who knows what variable rates will be like in 12 months time. Personally I think variable rates have bottomed but who knows?
It is important to have a clear plan as to what you are going to do next so that you can quantify the benefit, if any.
I see you are eager to do something and this worries me.
Is offsetting your savings that much when you can put your savings into a term deposit anyway?
People get burned on deals alone so If you are going to buy another property and it ends up being the wrong property or your timing of the market is wrong then you would be better off with the fixed CBA loan.
Something to think about

 

[Terry_w]

From memory the rate is 8% or there abouts - unlikely rates will ever approach it during the next few years.

 

[Richard Feynman]

Thanks again everyone. Jon, very valid points. BV, Jon and others, I should have mentioned:

> 8% fixed for another 12 years

...yep.

 

[BV]

Thanks again everyone. Jon, very valid points. BV, Jon and others, I should have mentioned:

> 8% fixed for another 12 years

...yep.

Not the best rate but for the duration is probably ok,
Did they offer it to you or have you asked for it yourself?
Is it for an IP?
If it makes you feel better I have 1 of my commercial loans fixed at 7%

 

[Richard Feynman]

Not the best rate but for the duration is probably ok,
Did they offer it to you or have you asked for it yourself?
Is it for an IP?
If it makes you feel better I have 1 of my commercial loans fixed at 7%

It was offered to me, but stupidly I opted for the comfort without realising the full consequences of my choice.

It's for my PPOR ? even worse.

Live and learn!

 

[BV]

It was offered to me, but stupidly I opted for the comfort without realising the full consequences of my choice.
It's for my PPOR ? even worse.
Live and learn!

Can u turn it into an IP?
btw, the break costs will reduce as variable rates increase