Explainer: What is a break cost?
A break cost is a fee a lender charges when you repay your loan early or switch to a different type of loan during a fixed rate period.
This fee can be applied to home loans, personal loans, and car loans.
When do break costs apply?
Whenever you take out a fixed rate loan, lenders expect to earn money through the interest you pay during the specific time period. But if you break from that fixed rate period early, then the lender will lose money. Since that is less than ideal, lenders safeguard themselves against potential losses by including break cost fees.
If you are on a variable interest rate you usually won’t have to worry about this fee. However, depending on your lender you might have to pay an exit (or discharge) fee when you finish paying your loan or switch to a different lender.
How to avoid break costs?
Depending on your lender, you will have to meet certain requirements to avoid break costs. Some providers may have a prepayment threshold, which allows you to pay a certain amount before the free incurs.
Others might have a time period that doesn’t penalise you for paying off your loan in full early. This time period could be 6 to 12 months before the contract ends.
When taking out a home loan it is important to ask your provider about their break cost rules. That way you won’t be suddenly confronted with a massive fee if you find yourself in a situation in which you are able to pay off your loan early.
If you are looking for a fixed rate home loan, check out Mozo’s comparison table to see which loan may be the best for you. If you are thinking about buying a house soon check out our Home Loan Guides.
Home loan comparisons on Mozo - last updated 14 May 2022
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Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
interest rate
comparison rate
Initial monthly repayment3.59% p.a.
fixed 1 year2.54% p.a.No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
CompareCompareBasic Home Loan
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
- interest rate
- 4.79% p.a.
fixed 3 years
- comparison rate
- 3.02% p.a.
- interest rate
- 4.79% p.a.
fixed 3 years
- comparison rate
- 3.02% p.a.
- upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - up to $10,000 p.a.
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $750,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
Read our Mozo Review to learn more about the Basic Home Loan
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Fixed Rate Home Loan
Home Loan Package, Owner Occupier, Principal & Interest, LVR <80%
interest rate
comparison rate
Initial monthly repayment4.07% p.a.
fixed 1 year3.05% p.a.Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Receive $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 31 May 2022 and settle by 31 July 2022.
CompareCompareFixed Rate Home Loan
Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Receive $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 31 May 2022 and settle by 31 July 2022.
- interest rate
- 4.67% p.a.
fixed 3 years
- comparison rate
- 3.47% p.a.
- interest rate
- 4.67% p.a.
fixed 3 years
- comparison rate
- 3.47% p.a.
- upfront fees
- $0
- Ongoing fees
- $390.00 yearly
- Discharge Fee
- $300.00
- Extra repayments
- yes - free up to $10,000 p.a.
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $7,500,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- Receive $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 31 May 2022 and settle by 31 July 2022.
Read our Mozo Review to learn more about the Fixed Rate Home Loan
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Discount Fixed Rate
Owner Occupier, Principal & Interest, <80% LVR
interest rate
comparison rate
Initial monthly repayment4.69% p.a.
fixed 2 years3.54% p.a.Lock in a competitive rate for 2 years. Only 20% deposit required. Flexible repayment options and make up to $5,000 in additional repayments annually. Refinance to BOQ by 16 May 2022 and get $3,000 cashback (T&Cs apply).
CompareCompareDiscount Fixed Rate
Lock in a competitive rate for 2 years. Only 20% deposit required. Flexible repayment options and make up to $5,000 in additional repayments annually. Refinance to BOQ by 16 May 2022 and get $3,000 cashback (T&Cs apply).
- interest rate
- 5.09% p.a.
fixed 3 years
- comparison rate
- 3.94% p.a.
- interest rate
- 5.09% p.a.
fixed 3 years
- comparison rate
- 3.94% p.a.
- upfront fees
- $450
- Ongoing fees
- $10.00 monthly
- Discharge Fee
- $350.00
- Extra repayments
- yes - free up to $5,000 p.a
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- -
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- $3,000 refinance cashback, min $250,000, 80% LVR or less. Apply before 16 May 2022, settle by 31 August 2022.
Read our Mozo Review to learn more about the Discount Fixed Rate
Interested in a Bank Of Queensland home loan? Great choice!
Bank Of Queensland home loans come with
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Flexible repayment options
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Available for Owner Occupiers and Investors
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$3,000 cashback offer when you refinance. Limited time only, T&Cs apply.
Next step: fill out your details below, so Bank of Queensland can get in touch for an obligation-free chat about your needs.
Thank you for your enquiry
We’ve let Bank of Queensland know you’re interested in their home loan and one of their home loan experts will be in touch shortly to discuss your needs. We’ve also sent you an email confirmation as a record of your enquiry.
In preparation for your discussion with Bank of Queensland, you might want to have on hand the following info:
- Property details
- Your employment details
- If refinancing, the current home loan provider and product
Team Mozo
-
Mozo experts choice awards won:
- Split Home Loan - 2022
- Australia's Best Large Mutual Bank - 2021
Fixed Rate Home Loan
Owner Occupier, Principal & Interest, LVR<80%
interest rate
comparison rate
Initial monthly repayment2.99% p.a.
fixed 1 year2.53% p.a.Competitive fixed rates across 1 to 5 year terms. No application fee or annual fee. Free extra repayments (up to $10,000 per year). Winner of Australia's Best Large Mutual Bank 2021.
CompareCompareFixed Rate Home Loan
Competitive fixed rates across 1 to 5 year terms. No application fee or annual fee. Free extra repayments (up to $10,000 per year). Winner of Australia's Best Large Mutual Bank 2021.
- interest rate
- 4.19% p.a.
fixed 3 years
- comparison rate
- 2.92% p.a.
- interest rate
- 4.19% p.a.
fixed 3 years
- comparison rate
- 2.92% p.a.
- upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $275.00
- Extra repayments
- yes - free up to $10,000 p.a.
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- -
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly, Fortnightly, Weekly
- Special Offers
Read our Mozo Review to learn more about the Fixed Rate Home Loan
Interested in a Qudos Bank home loan? Great choice!
Qudos Bank home loan includes:
-
Competitive rates
-
No application fee or annual fee
-
Borrow up to 80% of the property value
Next step: fill out your details below, so Qudos Bank can get in touch for an obligation-free chat about your needs.
Thank you for your enquiry
We’ve let Qudos Bank know you’re interested in their home loan and one of their home loan experts will be in touch shortly to discuss your needs. We’ve also sent you an email confirmation as a record of your enquiry.
In preparation for your discussion with Qudos Bank, you might want to have on hand the following info:
- Property details
- Your employment details
- If refinancing, the current home loan provider and product
Team Mozo
-
Fixed Rate Loan
Owner Occupier, LVR<70%
interest rate
comparison rate
Initial monthly repayment3.39% p.a.
fixed 1 year2.88% p.a.Fixed rate home loan with unlimited extra repayments without penalty and unlimited redraw facility.
CompareCompareFixed Rate Loan
Fixed rate home loan with unlimited extra repayments without penalty and unlimited redraw facility.
- interest rate
- 4.49% p.a.
fixed 3 years
- comparison rate
- 3.32% p.a.
- interest rate
- 4.49% p.a.
fixed 3 years
- comparison rate
- 3.32% p.a.
- upfront fees
- $150
- Ongoing fees
- $350.00 yearly
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $249,999
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- Receive $4,000 cashback on eligible home loans over $700k for LVRs <80% for refinances, or new purchases with LMI. $3,000 cashback for loans between $500k and <$700k. Applications made before 31 May 2022, settled by 31 July 2022.
Read our Mozo Review to learn more about the Fixed Rate Loan
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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