Break Cost Estimate Calculator
Get a rough estimate of the break cost payable for exiting a fixed rate home loan early, based on the rate difference and time remaining.
Your results
Calculation breakdown
- Simplified break cost
- balance × (fixed rate − current rate) ÷ 100 × (months remaining ÷ 12), floored at zero
Worked example
A $450,000 balance with 24 months left on a 5.5% fixed loan, against a current 6% comparable rate, results in an estimated break cost of $0 since rates have risen, not fallen.
Assumptions
- This is a simplified estimate only; actual break costs use each lender's wholesale funding cost formula, which can differ significantly.
- Contact your lender directly for an exact break cost quote before deciding to refinance or pay out a fixed loan early.
How this calculator works
This calculator provides a simplified estimate of a fixed rate break cost by applying the difference between your fixed rate and a current comparable rate to your outstanding balance over the remaining fixed period.
Frequently asked questions
Why do lenders charge a break cost?
Lenders fund fixed rate loans through matching wholesale funding; if you exit early and rates have fallen, the lender can be left funding at a rate higher than they can re-lend at, and the break cost compensates for this.
Is this the exact figure my lender will charge?
No, each lender uses its own formula involving wholesale swap rates; this is only a simplified estimate to help you gauge the scale of a potential break cost before contacting your lender for an exact figure.
When is a break cost likely to be zero or low?
If current rates are similar to or higher than your fixed rate, the break cost is often low or nil, since the lender is not disadvantaged by the early exit.
Results are estimates only and are not financial, tax, legal or credit advice.