I have two inveatment IP loans with ANZ both fixed one year ago for five years at 8.25%.
I queried the mnager on breaking to variable and the costs were prohibitive.
Question is, is there a way of refinacing whereby the refi cost would be less than the break cost ?
The break fee is the cost of interest foregone by the bank in letting you out early – you'd have to find a pretty sweet deal to make it worthwhile. There was a post the other week indicating it cost someone about $100k to refinance/break, lower rates don't come cheaply regardless of what the goose might encourage you to do.
Hi Bardon,
You would have to do the sums – depends on the loan size, the time you work it out over, and what happens with rates in the future – only one of whcih you have control over.
There are a stack of people who have done similar, and without going into the pros and cons, I would simply suggest if you are going to do it, do it quickly (For an IP, and if you were happy with the amounts you were paying, mabe you shoudl leave it?)Reason I say so, is these costs to break will increase. Just last week, I had a customer who had been quoted an exit fee of '$0' from his lender on a 7.95% fixed loan not quite three weeks ago, have this 'amended' to $4200.
And it looks like with rates going lower (even now a couple of banks have 6.99% deals) this will only get worse.
All the best.
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