What are home loan break fees?
Life doesn’t always go to plan. Sometimes that means ending your home loan earlier than expected. Whether you're selling, refinancing, or consolidating your repayments, it’s important to understand the potential costs involved.
At Pepper Money, we’re here to help you make informed decisions. That includes knowing what break fees are, when they apply, and what they might mean for your finances.
What are home loan break fees?
Break fees are charges that may apply if you repay or end a fixed rate home loan before the agreed term ends.
The amount can vary depending on your lender and what’s happening with interest rates at the time.
For example, if interest rates have dropped since you locked in your fixed rate, your lender may charge a fee to cover the difference.
When do break fees apply?
Break fees may apply if you:
- refinance your loan before the fixed rate period ends
- repay your loan in full ahead of schedule
- sell your property and close your loan
Because the calculation can be complex, it’s a good idea to ask your lender for a quote before making any decisions.
Types of fees to look out for
Here are some other fees you might come across when ending or switching your loan:
Early exit fees
Discharge fees
This is the cost of closing your loan account.
At Pepper Money, this fee is included in your loan contract upfront, so you know what to expect. There may also be legal or documentation costs involved.
Refinancing fees
If you’re switching to a new lender, you may pay fees to set up your new loan and close your existing one.
This could include discharge fees and, if you’re on a fixed rate, break fees.
If you're unsure about which fees may apply to your loan, it's always a good idea to reach out to your lender for clarity.
FAQs about home loan break fees
Break fees are charges that may apply if you repay or end a fixed rate home loan before the agreed term ends.
The amount can vary depending on your lender and interest rates at the time. If interest rates have dropped since you locked in your fixed rate, your lender may charge a fee to cover the difference.
Break fees may apply if you refinance your loan before the fixed rate period ends, repay your loan in full ahead of schedule, or sell your property and close your loan.
No. The calculation can be complex, so it’s a good idea to ask your lender for a quote before making any decisions.
Early exit fees, also called early termination or deferred administration fees, may apply if you pay out your loan within a set period.
You may also encounter discharge fees, which cover the cost of closing your loan account, and refinancing fees when switching lenders. These can include costs to set up your new loan and close your existing on. If you're ever unsure, speak to your lender to request for a full list of fees that may be applicable to your loan.
We're here to help
Contributor | Dianne Wassouf, Head of Customer Solutions
Dianne joined Pepper in 2012 and is now responsible for all Customer Service and Resolutions post settlement teams across Australia and Manila. Her expertise focuses on customer solutions and assistance and has equipped her with a deep understanding of client relations and service excellence.
Published by Pepper Money. Read our Editorial Policy to learn how we create and review content.
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