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How to break a fixed mortgage

17/11/2011

If you're already on a fixed-rate loan and are thinking about refinancing, ask first for an indicative payout figure, making sure this includes any break cost.

Remember that this payout figure might change if you don't act straight away.

Those who fixed in August and September won't have cause for regret yet. The typical fixed rate was 6.6 per cent to 7 per cent then and even after the recent rate cut the average big-four variable rate is 7.55 per cent.

However, those who locked in about 8 per cent in November 2007 know how costly it can be if you need to break a loan early when rates are falling. A year after they fixed, the global financial crisis hit and rates plummeted, sending break costs soaring.

Source: Sydney Morning Herald



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