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Cancel Fixed Rate Loan

So, you fixed your home loan rate last year when they were rising and now rates are falling? Or perhaps you just want more flexibility than your fixed rate home loan currently offers?

Whatever the reason for cancelling your fixed rate mortgage, you will be charged for early exit of the contract. Along with administration fees such as document preparation, settlement and legal fees, valuations fees and the like, you will also have to pay exit fees to your current lender to break the contract. Even if you refinance with the same lender, fees are likely to be payable. Any savings you make by switching to a lower rate could be swept up in fees.

Calculations: you find a new loan, with an interest rate that is more than one per cent lower than your current loan, and your new loan saves you $250 per month. If all the exit fees add up to $1500 to refinance your loan, it will take you six months to break even.

Key reasons why people cancel a fixed rate morgage:

To get a lower interest rate thank currently being paid
Releasing the equity in their home (for renovations, to buy a second property, to top-up retirement funds etc)
To get more flexibilty or to change the terms of the loan (extend length of loan, access a redraw facility)

Whatever the reason for refinancing, you should consider your options carefully and weigh up the long term benefits as well as looking short term. You may want to talk to your mortgage broker to find out more.

Cancel Fixed Rate Loan

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