What Does It Actually Cost to Break a Fixed Rate Home Loan in Australia?
There is no standard break cost figure. On the same loan amount, the cost can be $500 or $50,000 depending on how far rates have moved since you fixed, how long is left on the fixed term, and your lender’s specific calculation methodology.
Break costs on Australian fixed rate home loans are not simple fees. They are calculated using a formula that reflects the lender’s funding cost difference — and in certain rate environments, they can be substantial enough to wipe out the benefit of refinancing entirely.
How Break Costs Are Calculated
The formula: outstanding balance × rate difference between your fixed rate and the current wholesale rate for the remaining term × years remaining. When wholesale rates have fallen since you fixed, the difference is positive and you pay. When rates have risen since you fixed, the break cost may be minimal or zero.
In 2026 — A Rising Rate Environment
If you fixed your rate 18–24 months ago at a lower rate and current rates are higher, your break cost may actually be minimal or zero — because your lender’s cost of replacing your loan at today’s rates isn’t a loss for them. This is one of the few circumstances where breaking a fixed loan in a rising rate environment is financially reasonable to explore.
How to Find Out Your Actual Break Cost
Call your lender directly and request a break cost quote. This is a legitimate customer request and they are required to provide it. The quote is usually valid for 24–48 hours. Request it in writing.
What Else to Factor In
- Discharge fee from current lender: $150–$400 (separate from the break cost)
- New loan establishment fees at the incoming lender: $0–$600
- Government registration fees: varies by state
You may wish to speak with a licensed mortgage broker to assess your personal circumstances.
This is general information only. Break cost calculations vary by lender and are affected by market conditions at the time of request. Speak with a licensed mortgage broker and your lender before making any decision. All loans are subject to lender approval.
Sources: ASIC MoneySmart, Break Costs on Fixed Rate Loans; RBA, Monetary Policy Statement 2026; National Consumer Credit Protection Act 2009.
