Early Repayment fee for fixed rate home loans

Your fixed rate home loan

When you choose a fixed rate home loan, your interest is fixed from the start and stays the same for the term you've chosen. This option makes budgeting easier, because your payments will stay the same over the fixed rate term you’ve chosen.

You're also able to make extra payments up to $10,000 per calendar year; however, if you pay more than this or break a fixed term early, you may need to pay an Early Repayment fee. A minimum payment amount may also apply¹.

Repaying or breaking your home loan early

If you decide to break your fixed rate home loan early to switch to a different interest rate², fully repay the loan early, ask us to restructure your home loan, or make over $10,000 in additional payments over the calendar year for example, an Early Repayment fee may be charged.

We calculate whether repaying or breaking your home loan earlier than agreed will result in a loss for us. If it does, we may charge an Early Repayment fee to help recover this loss.

How we calculate the fee

Rather than using the calculation in the Credit Contracts and Consumer Finance Regulations 2004, we use our own mathematical formula. This formula is complex, but it takes into account the following to see if an early repayment fee is to be charged, and if so, how much.

What’s considered

The amount being repaid early, including any additional repayment allowance remaining.
The wholesale interest rate³at the start of your fixed rate term.
The relevant wholesale interest rate³at the date of your early repayment, for a period equal to the time remaining in your fixed rate term.
What your current regular payments are.
We adjust the wholesale interest rate³ to reflect certain characteristics of your loan.

What we compare

We calculate the interest charges and your scheduled regular payments that would have been made over the time remaining in the fixed rate term, using the wholesale interest rate³that applied at the start of your fixed rate term (the first amount) and,
We calculate the interest charges and your scheduled regular payments due from the date of your early repayment to the end of your fixed rate term, using the wholesale interest rate³ that would apply for the time remaining in your fixed rate term (the second amount).

We adjust both amounts to recognise that we will receive the payment now, instead of over the term of the home loan.

If the first amount is larger than the second amount, we expect that your early repayment will cause a loss to us and an Early Repayment fee will be charged.

The way we calculate the fee can be expressed (in a simplified way) as:
Early repayment fee = Amount you wish to pay * interest rate differential * remaining fixed rate term

Full repayment example

Your home loan is on a two-year fixed rate contract with us, and after six months, you choose to repay the entire loan balance, currently $100,000, leaving 18 months of your fixed rate term remaining. You have already made $10,000 in additional payments, so any Early Repayment fee is calculated on the full repayment amount of $100,000.

At the time you fixed your loan, the wholesale interest rate for a two-year fixed rate was 5.00% p.a., however the current wholesale interest rate for the remaining fixed rate term (18 months) is 4.50% p.a. As the first amount is larger than the second amount, that means we expect that your early repayment will cause a loss to us and an Early Repayment fee will be charged.

So as an approximate calculation, we take the amount you wish to repay and multiply that by the interest rate differential, times the remaining fixed rate term. This is a simplified example and hasn’t been adjusted to consider what your current regular payments are or to recognise that we will receive the payment now, instead of over the term of the loan.

Early repayment fee = $100,000 * 0.50% p.a. * 18 months = approximately $750.

Partial repayment example

Your home loan is $250,000 on a two-year fixed rate, and after one year and six months, you choose to repay $50,000 on that loan, leaving six months remaining on your fixed rate term. Because you have not made any additional payments in this calendar year, the $10,000 permitted in additional payment applies, and any Early Repayment fee is calculated on the remaining repayment amount of $40,000.

At the time you fixed your loan, the wholesale interest rate for a two-year fixed rate was 5.00% p.a., however the current wholesale interest rate for the remaining fixed rate term (six months) is 4.50% p.a. As the first amount is larger than the second amount, that means we expect that your early repayment will cause a loss to us and an Early Repayment fee will be charged.

Early repayment fee = $40,000 ($50,000 less the $10,000) * 0.50% p.a. * 6 months = approximately $100.

Potential early repayment fee examples

The below table provides simplified examples of the potential early repayment fee for a $100,000 early repayment, for different rates and terms. We’ve used a $250,000 loan making weekly payments of $400 and have assumed that they have not made any additional payments within the calendar year.

Potential early repayment fee example

Please note: The explanation and examples above are simplified and the actual Early Repayment fee calculation is complex. The result of the calculation depends on the specific features and terms of your home loan — it will not be the same for everyone and will change each day. We recommend you ask us for a quote before you look to repay (either partly or in full) or restructure your fixed rate loan.  

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When it comes to your home loan, we understand your needs are unique to you and your household, and one size doesn't fit all. We’ve got great rates, loan and repayment options, and a home loan calculator to help you work it out.

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Important information

¹For some methods of payment, we may set a minimum payment amount that you must pay each time you choose to repay some of your loan early. If we do set a minimum payment amount, you can find this on our home loan rates, fees and agreements page.

²If you break your fixed rate early to refix to a new interest rate, this is treated as a full repayment as we’ll give you a new home loan with the changes you’ve asked for.

³Wholesale interest rates are wholesale interest swap rates determined using relevant market information. When we determine the applicable rates, we use the most recently available market rate we have on the relevant day.