Break Cost Calculator: Work Out Your Fixed-Rate Home Loan Break Fees

Example 1: North Shore Homeowner Refinancing

Scenario:

• $850,000 loan
• 3 years remaining
• Rate difference 2.0%

Calculation: $850,000 × 3 × 0.02 = $51,000

If refinancing saves 1.5% p.a.: $850,000 × 0.015 = $12,750 per year

Over 3 years = $38,250

Verdict: Break cost ($51,000) exceeds savings ($38,250). Better to wait.

 

Example 2: Western Sydney First-Time Buyer Upsizing

Scenario:

• $500,000 loan
• 1 year remaining
• Rate difference 1.2%

Break cost: $500,000 × 1 × 0.012 = $6,000

Additional costs: $350 discharge fee + $800 application fee

Total ≈ $7,150

Verdict: A relatively small cost if you need to move for a growing family.

 

Example 3: Eastern Suburbs Investor Converting to Variable

Scenario:

• $1,200,000 loan
• 4 years remaining
• Rate difference 0.8%

Break cost: $1,200,000 × 4 × 0.008 = $38,400

However, if wholesale rates have risen since fixing, break costs could be minimal or even $0.

Verdict: Always request an official quote – it may be far lower than expected.

 

Example 4: When Break Costs Are $0

If wholesale rates are now higher than when you fixed, the bank can actually profit when you break early.

In some cases, break costs are $0.

If you believe a lender has calculated your fees unfairly, the Australian Financial Complaints Authority (AFCA) can review disputes.

 

How Different Lenders Calculate Break Costs

Each lender has different policies on break costs, extra repayments, and what they call these fees.

Below is a comparison of major Australian lenders and how they generally structure their fixed-rate break policies.

Lender	Break Cost Name	Max Extra Repayments	Prepayment Threshold
CBA	Early Repayment Adjustment (ERA)	$10,000 per year	$10,000/year
Westpac	Break Costs	Up to 20% increase in repayments OR $30,000 total	$30,000 total fixed period
NAB	Prepayment Fees & Economic Cost	$20,000 total fixed period	$20,000 total
ANZ	Early Repayment Fee (ERF)	Lower of $5,000/year or 5% of loan	Varies
St George	Break Costs	$30,000 total fixed period	$30,000 total
Bankwest	Break Costs	$10,000 per year	$10,000/year
Suncorp	Early Payment Interest Adjustment (EPIA)	$500 per month extra	Varies
RAMS	Fixed Rate Unwind Adjustment	Varies by product	Varies

Current as of February 2026. Policies may change – always check with your lender or speak with an AFMS broker.

 

Should You Break Your Fixed-Rate Loan? (Decision Framework)

Breaking a fixed-rate loan is not inherently good or bad – it simply needs to make financial sense in your circumstances. Below is a practical framework to guide your decision.

Step 1: Get Your Official Break Cost Quote

Start by requesting a formal break cost quote from your lender (or have your broker arrange it).

You will typically need:

• Your loan account number
• Current outstanding balance
• Proposed break date

Most lenders provide quotes within 1–2 business days. Importantly, quotes are generally valid for five business days only, as wholesale funding rates change daily.

Step 2: Calculate Your Total Refinancing Costs

Break costs are only one component of the overall cost to refinance. You should also factor in:

• Break cost (from the lender quote)
• Discharge fee ($350–$500)
• New loan application fee ($0–$800, depending on lender)
• Valuation fee ($0–$300, often waived)
• Legal or settlement fees
• LMI (if your equity position has changed)

For example: Break cost ($12,000) + Discharge fee ($350) + Application fee ($600) = $12,950 total cost to refinance.

Assess the full cost of exiting, not just the break fee itself.

Step 3: Calculate Your Potential Savings

Next, calculate the savings from refinancing.

(Current rate − New rate) × Loan balance = Annual savings

Example: (5.5% − 4.2%) × $600,000 = 1.3% × $600,000 = $7,800 per year

If you have two years remaining on your fixed term: $7,800 × 2 = $15,600 total savings

If total break and refinance costs are $12,000, this produces a net benefit of $3,600.

It is also important to consider that savings begin immediately. If you remain on a lower rate beyond the original fixed period, long-term savings may substantially outweigh the upfront cost.

Step 4: Consider Non-Financial Factors

Financial calculations are essential, but personal circumstances also matter.

Breaking your fixed loan may be justified if you are:

• Relocating for employment
• Downsizing following separation
• Upsizing for family needs
• Experiencing financial or health hardship

 

Variable loans also provide flexibility, including:

• Unlimited additional repayments
• Offset account access
• No break costs if you sell

For some borrowers, flexibility itself carries significant value.

 

Decision Matrix: Break or Wait?

Consider Breaking If:

• Projected savings exceed total costs by at least 20%
• You must sell for unavoidable reasons
• You are moving from a relatively high fixed rate to a materially lower rate
• Break costs are minimal or zero due to rising rates

 

Consider Waiting If:

• Break costs exceed projected savings
• Less than 12 months remain on your fixed term
• You do not urgently need to refinance
• The rate environment is uncertain

 

Seek Professional Advice If:

• The financial outcome is marginal
• You have multiple loans or a complex structure
• You are considering loan portability or restructuring

If the numbers are close, it is recommended to get expert advice before proceeding.

 

How to Request a Break Cost Quote (Step-by-Step)

Option 1: Request Through Your Lender Directly

Call your lender’s home loan servicing team and request: “An official break cost quote for my fixed-rate loan.”

Be prepared to provide:

• Loan account number
• Intended break date
• Reason for break (sale or refinance)

Most lenders provide quotes within 1–2 business days. They are typically valid for five business days.

Option 2: Have Your AFMS Broker Request It For You

If you are exploring refinancing, we can:

• Request your official break cost quote
• Compare multiple refinance options
• Model short- and long-term savings
• Provide clear recommendations

The process is straightforward:

Book a consultation → We obtain quotes → We review your options together → You make an informed decision.

👉 Book a Free Break Cost Consultation

 

Ways to Avoid or Reduce Break Costs

While break costs cannot always be avoided, there are strategies that may reduce their impact.

Strategy 1: Use Loan Portability

If you are selling and buying simultaneously, some lenders allow you to transfer your existing fixed loan to the new property.

This can allow you to retain your fixed rate without incurring break costs.

Eligibility depends on:

• Remaining with the same lender
• Meeting valuation requirements
• Completing settlement timelines correctly

Not all lenders offer this option.

Strategy 2: Wait for Rate Increases

Break costs are heavily influenced by wholesale funding rates.

If rates rise, your break cost may reduce – or potentially fall to zero.

You can monitor official cash rate decisions from the Reserve Bank of Australia and request updated quotes following rate increases.

Strategy 3: Use Your Extra Repayment Allowance

Most lenders permit $10,000–$30,000 in additional repayments during the fixed term without penalty.

For example: $650,000 loan − $30,000 extra repayment = $620,000 balance

Since break costs are calculated on the remaining balance, reducing the principal can lower the fee.

Strategy 4: Split Your Loan

If fixing again in the future, consider splitting your loan between fixed and variable portions.

For example: 50% fixed for certainty + 50% variable for flexibility

This structure may reduce exposure to full-loan break costs if circumstances change later.

Strategy 5: Negotiate with Your Lender

In some cases, lenders may reduce fees or offer retention incentives – particularly for long-term customers or where a competitive refinance offer exists.

A simple approach may be: “I’ve received a competitive offer elsewhere – can you match the rate or reduce my break costs?”

Our brokers negotiate these scenarios regularly and often achieve stronger outcomes due to established lender relationships.

 

Break Costs vs Other Refinancing Costs (The Complete Picture)

Break costs are only part of the overall financial picture.

Total Cost Breakdown Example

Loan: $750,000 – 2 years remaining on fixed term

• Break cost: $18,000
• Discharge: $350
• Application: $600
• Legal/settlement: $800

Total cost: $19,750

Compare to Total Savings Over Life of Loan

Refinancing from 5.5% to 4.5%:

1% × $750,000 = $7,500 saved annually

Over 2 years = $15,000

This creates a short-term gap of $4,750.

However, if you remain on the lower rate for five years or longer, cumulative savings can significantly exceed the upfront cost.

The key is to assess the longer-term benefit – not just the remaining fixed period.