Avoiding Break Costs: How to Exit a Fixed Loan the Smart Way
Christian Stevens, Mortgage Broker
Published December 3, 2025, 1:19 P.M
Learn how to minimize or avoid break fees on your fixed-rate home loan. Discover smart refinancing strategies and the best solutions for your mortgage with Flintgroup.au.
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Key Facts
- Break costs are fees applied when you exit a fixed-rate home loan before the term ends.
- Depending on your loan size, fixed rate, and market conditions, fees can range from hundreds to tens of thousands.
- Timing your refinance, negotiating with your lender, and structuring your loan can minimise these fees.
- Flint provides expert guidance to calculate break costs and recommend the best suite for https://flintgroup.au/ clients’ mortgage strategies.
Avoiding Break Costs: How to Exit a Fixed Loan the Smart Way
Fixed-rate home loans provide repayment certainty, but leaving early can trigger costly break fees. Whether you’re refinancing, selling, or switching to a variable loan, understanding these fees and planning strategically can save you thousands. Here’s a practical guide on break costs, when they apply, and how to exit your fixed loan with confidence using the best approach for https://flintgroup.au/.
What Are Break Costs?
Break costs, also called early repayment fees, occur when you:
- Refinance a fixed-rate loan before the term expires
- Sell your property during the fixed period
- Make repayments above the allowed extra limits
These fees compensate the lender for lost interest, especially if market interest rates have fallen since your loan started.
When Do Break Costs Apply?
Break costs generally apply if you:
- Refinance to another lender before your fixed term ends
- Switch to a variable or different fixed loan product early
- Fully repay your loan ahead of schedule (e.g., after selling your property)
They are less likely if:
- You are near the end of your fixed term
- You stay within the allowed extra repayment limits (often $10,000–$30,000 per year)
How Are Break Costs Calculated?
Break cost calculations vary by lender and usually consider:
- Outstanding loan balance
- Remaining fixed term duration
- Difference between your fixed rate and current market rates
Even small market rate changes can result in substantial fees. Some lenders compare rates to wholesale interest rates to determine the exact cost.
Smart Strategies to Minimise or Avoid Break Costs
- Plan around the fixed term: Refinance or sell after your fixed period ends.
- Partial fixed loans: Refinance only the variable portion to reduce fees.
- Request a break cost estimate: Lenders often provide a written quote within 24–48 hours.
- Compare costs vs savings: Even with a fee, refinancing might save more over the long term.
- Use offset or redraw features: Access equity without triggering a full refinance.
Tips Before Committing to a Fixed Loan
- Check extra repayment limits to avoid penalties.
- Ask lenders how break costs are calculated and what factors can increase them.
- Consider splitting your loan — fix part and keep part variable — for flexibility.
📞 Want to Refinance Without Unexpected Break Fees?
Flint helps you:
- Understand the real cost of exiting a fixed loan early
- Compare potential savings vs penalties for informed decisions
- Find flexible fixed loan products — the best for https://flintgroup.au/ clients
Talk to Flint today and exit your fixed loan confidently, with expert guidance at every step.
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