Fixed rate break costs explained
A break cost is the fee a lender charges when you end a fixed rate home loan early, by refinancing, selling, switching products or repaying more than the loan allows. It represents the lender's loss on the wholesale funding behind your fixed rate, so it is large when rates have fallen since you fixed and can be zero when they have risen. This guide covers when it is charged, how it is calculated with a worked example, the prepayment thresholds lenders publish, and the ways to avoid it.
- Charged when you refinance, sell, switch products or repay above the threshold during a fixed term; Westpac publishes it can be charged more than once
- Sized by the balance, the time left and the fall in wholesale rates since you fixed; it can be tens of thousands of dollars (Westpac, St.George) or nothing if rates have risen
- Prepayment thresholds: NAB $20,000 per fixed period; St.George and BankSA $30,000 for the whole fixed period; Westpac publishes a threshold without the figure
- Portability avoids it when you sell and buy (Westpac, St.George); a variable split takes the extra repayments; waiting for the fixed term to end avoids it on a refinance
- Get the quote in writing: it changes daily with wholesale rates and is valid only briefly
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.
What is a break cost?
Westpac's definition: a break cost is a fee that may apply if you end a fixed rate home loan early, which might be due to refinancing, selling your property, or making large extra repayments before your fixed term ends, and the fee helps cover the cost to the lender of obtaining the money for your loan on the wholesale money market. St.George puts it as the fee that represents its loss if you repay early or switch product. The names vary: NAB says economic cost, CommBank says early repayment adjustment, and Westpac publishes a list of the alternatives. They all mean the same calculation.
When is it charged?
St.George publishes two kinds. A prepayment break cost applies if you prepay part or all of the loan before the fixed period ends and the amount exceeds the prepayment threshold. A switching break cost applies if you switch to another product, interest rate or payment type before the fixed period ends. Westpac adds that any change on a fixed loan may incur it, that it may not be a once-off charge, and that a default with the whole balance falling due can trigger it if wholesale rates have moved. Refinancing to another lender is a full repayment, so it is the largest and most common trigger.
How is it calculated?
Every lender publishes that its formula is complex and that you should ask for a quote; St.George says its formula is available on request. Home Loan Experts publishes the simplified version: break cost = loan amount × remaining fixed term × change in the cost of funds, where the cost of funds is the wholesale swap rate the lender used when it fixed your loan compared with the rate it can reinvest at now. Its worked example: $300,000 with two years remaining and a 1% fall in wholesale rates gives $300,000 × 2 × 1% = about $6,000. Double the balance or the time left and the cost doubles; if wholesale rates have risen since you fixed, the lender has no loss and the break cost is nil, which is why break costs were small in a rising-rate cycle and large after cuts.
| Balance | Fixed term remaining | Fall in wholesale rates | Indicative break cost |
|---|---|---|---|
| $300,000 | 2 years | 1.0% | About $6,000 |
| $600,000 | 2 years | 1.0% | About $12,000 |
| $600,000 | 3 years | 0.5% | About $9,000 |
| $600,000 | 1 year | 0.25% | About $1,500 |
| Any | Any | Rates have risen | Usually nil |
These are illustrations of the simplified formula, not quotes. Lenders discount the future interest difference and use their own funding curve, so the real figure will differ; NAB publishes that the cost of funds changes each day and that you need a banker's quote.
What do lenders publish on break costs and thresholds?
Checked against each lender's published page on 20 September 2026; "Not published" means the page does not state it. Policies change without notice, so confirm before relying on them.
| Lender | Name used | Extra repayments allowed while fixed | Triggers named | How to get a figure | Ways to avoid it |
|---|---|---|---|---|---|
| NAB | Economic cost | Up to $20,000 during a fixed rate period without economic costs | Paying out or changing the loan; paying more than scheduled when the cost of funds has dropped | Talk to a banker; the cost of funds changes daily | Publishes that a fixed loan may not suit someone hoping to pay off early |
| Westpac | Break cost | A prepayment threshold applies; figure not stated on the page | Refinancing, selling, switching, prepaying above the threshold, default; can be charged more than once | Request a break cost quote; can be tens of thousands | Portability when buying and selling during a fixed term |
| St.George | Prepayment break cost and switching break cost | $30,000 prepayment threshold for the whole fixed period | Prepaying above the threshold; switching product, rate or payment type | Ask for an estimate; the figure is valid for a limited time; formula on request | Portability: break fees do not apply when the security is substituted |
| BankSA | Prepayment break cost | $30,000 prepayment threshold for the entire fixed period | Prepaying above the threshold | Explained in its break cost fact sheet | Split between up to four fixed and variable accounts; put extra repayments on the variable split |
| CommBank | Early repayment adjustment | Not published on the support page | Not published on the support page | Ask CommBank | Publishes that fixed loans cannot be topped up without breaking the contract |
| Home Loan Experts (broker guide) | Break fee | Lists lender caps of $20,000 or $30,000 per fixed term, $5,000 a year or 5% of the loan, or a set monthly amount | Extra repayments above the cap; paying out the loan | Simplified formula and a calculator | Flexible fixed products with higher caps |
How to avoid break costs
Sell and buy with portability. Westpac and St.George both publish that substituting the security keeps the loan intact and break costs do not apply; the portability guide covers the rules. Keep a variable split. BankSA publishes up to four fixed and variable accounts on one property; put every extra dollar and the offset on the variable split and leave the fixed split at its minimum. Stay under the threshold. NAB's $20,000 and St.George's and BankSA's $30,000 are per fixed period, not per year, so spread larger prepayments across the term. Time the refinance. The fixed rate ending guide covers lining up a new loan for the day the fixed term expires, when the break cost is nil. Fix for the right length. The cost scales with the time remaining, so a shorter fixed term limits the exposure.
Is it ever worth paying?
Only when the interest saved over the rest of the fixed term is larger than the break cost plus the other refinancing costs, and that is unusual, because a fall in rates large enough to make refinancing attractive is the same fall that makes the break cost large. Get the written quote, put it against the saving, and include any cashback the new lender pays. A broker does this comparison routinely and can ask the lender for the quote on your behalf. Your Finance Guide refers you to one licensed broker partner for that; we do not lend or assess applications ourselves.
Fixed rate guides
Ending, moving, locking and splitting a fixed rate.
Break cost FAQs
How much does it cost to break a fixed-rate mortgage?
When is a break cost charged?
How much can I repay on a fixed loan without a break cost?
Can I avoid break costs when I sell and buy?
Is it worth paying break costs to refinance?
Why is it called an economic cost or early repayment adjustment?
How do I get a break cost quote?
Leave a fixed rate without paying for it twice
Tell us your fixed rate, when it ends and why you want to move, and we refer you to one licensed broker partner who gets the break cost quote, weighs it against the saving, and finds the route that avoids it. Free for borrowers, no obligation.