We all know the mortgage interest rates have moved so much in the last few years. It may continue to do so too.
It’s not so long ago we fixed some loans at 5 to 5.5% and to see they have now dropped down to 2.69%. Obviously no one had a crystal ball to predict this kind of a market movement. However it’s so important that we keep on top of the mortgage rates, repayments etc.
There is no better time than now. However there are important things you need to know:
- By fixing your loan, you have entered in to a contract with the bank
- Breaking the loan means a re-negotiation of this contract
- As the rates have gone down – this means there is a break fee/cost
How does the bank charge a break fee?
This is not as simple as we think. The Early Repayment Recovery is a calculation on the day you repay some or all of your loan. The final amount can change day-to-day as it depends on the following:
- When you repay or change your loan
- How much you owe and how much you’re repaying early
- How much wholesale swap interest rates have moved since the start of your fixed-rate period. Wholesale swap interest rates are interest rates that banks and other large corporations use when they borrow and lend money in the wholesale money market. You have more information about how banks calculate the Early Repayment Recovery in your loan agreement.
There are some good client stories too that are definitely worth exploring
This is not going to be true for all! It depends on the personal circumstances. Your ability to absorb the break cost but pay off faster, etc. It is really worth having a conversation to personalise your requirements and plans. Please click the button below and pick a time that suits you.