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John W.
John W.
Penrith, NSW
22 Likes
4 Followers

Are banks still able to penalise you for paying out the loan early?

9 years ago
Comments

No. Unless it's a fixed rate loan.
Early termination or 'Deferred Application Fees' were legislated out some years ago

Responses

Hi John,
Early repayment penalties were abolished a few years ago. However, if you try and break a fixed interest rate you may still find that a interest penalty may apply.
This could even apply if you try and refinance the loan, not just pay it out.
Check payout fees with your bank before you do anything with your home loan.

Hi John,

Deferred establishments fees as they used to be called no longer exist & have been abolished for a while now.

If you have a fixed rate however that still has time left then you will be up for fees for breaking the fixed term before it expires. This fee is extremely hrs to calculate & you are best speaking to your lender to get a pay out figure so you can have some idea of what you might be up for if you have a fixed loan.

Lenders do still charge what is called a discharge fee which can range from $250-$500. This will be noted in your loan offer.

Hope this helps & please feel free to contact me to discuss further.

Hi John
On a fixed rate loan the banks can still charge 'break costs' these will vary depending on a number of factors
Whilst they can't charge break fees on variable rate home loans you will still incur their discharge of mortgage fee, typically between $250-$500
Happy to provide more information if needed
Brett D
Oxygen Home Loans
Mob 0439 456 051

9 years ago

Hi,

You can pay your variable loan in full any time with no penalties. Banks only charge small exit fee which could be anywhere around $300

Penalties do apply when you pay your fixed loan which is called as break cost. It is calculated at the time you break your fixed loan and it is based on fixed term left and the fixed rate at that time.

Hey Josh,

Only if your loan is fixed you will receive a breakage fee. The break fee is an interest adjustment (depending on how long until your fixed term ends, it can be in the thousands)
If you have a variable rate and win the lottery (fingers crossed!) you can pay it out in full with no penalty.
In saying this, there is a discharge fee which is around $300 but it's not a penalty.

Regards,
Daniel

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