Fixed vs Variable › What are break costs on a fixed rate?

What are break costs on a fixed rate?

Break costs are fees a lender charges if you exit a fixed rate early, for example by refinancing, selling, or repaying ahead of schedule. They are based on how wholesale rates have moved since you fixed, so they can vary a lot.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

Break costs catch people out because they are not a flat fee, they depend on market movements. If rates have fallen since you fixed, the cost can be significant; if they have risen, it may be small. This is the main risk of fixing, so it is worth understanding before you lock in, especially if you might sell or refinance.

The key points

Charged for exiting a fixed rate early.
Based on wholesale rate movements since you fixed.
They can be significant or small depending on the market.
The main risk to weigh before fixing.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.