• Home
  • Pre Approval
  • Online Mortgage Brokers
  • Get Started in Just 2mins
  • Refinance Your Mortgage
  • Mortgage Brokers Wellington
  • First Home Buyers
    • KiwiSaver
    • Homestart Grant - KiwiSaver Deposit Subsidy
    • Welcome Home Loan
  • About
    • Our Services
    • Our Lenders
    • FAQs
    • Testimonials
    • Privacy Policy
  • Contact
    • Online Mortgage Solutions
  • Outside Wellington Area?
  • Insurance Needs
  • Blog
  • Useful Info & Resources
    • Buyer and Sellers Guide
    • Disclosure Statement
    • REAA Sale & Purchase Guide
    • Tenders
The Wellington Mortgage Broker

in your best interests

refinance your mortgage & break fees

19/2/2016

0 Comments

 
Early repayment charges
A fixed interest rate home loan is a contract between you and a lender. You agree to repay the loan by a certain date - no sooner, no later. The lender agrees to keep the interest rate the same over the chosen fixed rate period.

As it is a contract is makes sense to fully understand what you're getting into. Unfortunately not all lenders take the time to full explain or highlight every fact of their loans - so we'll aim to shed some light on the them for you!

Not surprisingly circumstances can change. Sometimes unexpected things happen and you might need to break your fixed rate contract by repaying your fixed interest rate loan before the agreed due date. You may see more attractive rates elsewhere and decide to switch to another interest rate before the end of your fixed rate period. You may be making a full or partial lump-sum repayment, or increasing your regular payments. 

Why is there a charge?
The bank charges borrowers an early repayment charge to recover the loss the bank incurs when a loan is partially or fully repaid, you switch to another interest rate, or you repay the fixed rate loan faster than originally agreed.
​
Banks have purchased the money they are lending to you at wholesale rates, and if these were higher (at the time you locked in the rate) than now, then a break fee (or Early Repayment Fee) will apply.                                                                                                                                                            

my breAK FEES WILL BE HUGE THOUGH!

If you've already been in touch with your lender and have obtained a quote for the break fees then that's great - we know what we need to contend with. Even if your break fees are in the thousands (and they probably will be) it can still make financial sense to pay these to get onto a lower rate.
​
If you haven't found out the break costs yet - no problem. We can calculate an estimate for you if you can provide us with the following info:​
  • Date the fixed rate started
  • Current loan balance
  • Date fixed rate matures
From there we can estimate the costs involved for you, and how long it will take to break even. We can also highlight how much extra 'cashflow' you'll enjoy from the lower rates available. Remember, cashflow is king. If cashflow is tight, or an extra amount each month would be useful then breaking a higher rate fixed term makes sense, 
​
contact us now to find out more
0 Comments

    Author

    Brian MacLean looks into tips, ideas and strategies you can use to get ahead financially..

    Archives

    August 2017
    July 2017
    May 2017
    June 2016
    March 2016
    February 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015

    Categories

    All
    About
    Deposits
    Guarantors
    P-lab
    Porirua
    Purchasing
    Rental Property
    Tips

    RSS Feed

Home

About

Apply

Privacy

Contact

Copyright © 2017 Wingding Designs Ltd  - P O Box 50762, Porirua 5240
For all your mortgage requirements in Wellington, Porirua, Lower Hutt, Upper Hutt, Kapiti and beyond!