Refinancing › What are break costs on a fixed loan?

What are break costs on a fixed loan?

Break costs are a fee a lender can charge if you exit or change a fixed rate loan before the term ends. They are based on movements in wholesale rates, so they can be large or small, and they are the main reason to time a refinance around your fixed term.

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

Why this matters

Break costs are the part of fixed loans that surprises people most, because they are not a flat fee but a calculation tied to interest rate movements since you fixed. They can be negligible or significant, so the safe play is to find out the figure from your lender before deciding to break a fixed loan.

The key points

A fee for exiting a fixed loan early.
Based on wholesale rate movements, so it varies.
Time a refinance around your fixed term to avoid it.

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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.