Hi v8Ghia

Thank you for your submission on this thread as it has become a hot topic recently.

If you or anyone can help me understand the predicament we are in that would be appreciated…

We fixed when interest rates were going up as we have a baby and an investment property on a variable interest only set up.

The fixed rate loan was on our mortgage and is around $255k. We now wish to sell the house (something at the time we had never thought of, and you wouldnt in a rising interest rate market) and borrow a total of $500,000 yet our lender wants to charge us around $18k to break it.

They have offered to continue with that portion but at that rate fixed for the next 3 years (8.2%) and set up the remainder of the borrow at the current variable rate. This unfortunately does not become viable to us as it is simply not affordable paying $255K at 8.2% and $245k at 5.75%. If the whole lot was at 5.75% then yes it is affordable.

We are even willing to accept another fixed rate of 5.00% (if and when it ever gets there) and wouldnt mind in the slightest if it went to 1%!! as we are comfortable with the home we are intending to buy and the proposed repayment amount.

The wholesale rate comparison that the banks use, where can one find it for the calculations needed to see whether this quoted figure is correct or not?

You would think that a borrow of an extra $245K would be sufficient to waive a $18K break costs considering the amount of interest over a 30 year loan on the extra $245k is $228K!!!!!!!!!!!!!!!!!!!!!!!!!!

Any thoughts?

TheGlassy