Exit fees cant stop you switching lenders

Mortgage exit fees can only cover the lender’s losses from the borrower leaving the loan early. ASIC advises borrowers that they can get more information on their new rights under new regulations enforced by ASIC at the ASIC website. A lender can not try to recover profit they may have made if the loan went full term and they may not attempt to recover marketing costs.

The law does allow lenders flexibility with their pricing and may offer borrowers loans with no upfront application fees and may then be justified in charging a higher exit fee. Exit fees should reduce over time, so an early exit fee in year three should be lower than in year two of a mortgage.

Source: Herald Sun