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 21 May 2022
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Own Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR <60%
interest rate
comparison rate
Initial monthly repayment2.99% p.a.
fixed 1 year2.50% p.a.Competitive variable rates. Free extra repayments and redraws. No Lender’s Mortgage Insurance. Multiple offset accounts available. Fast digital application. 40% deposit required.
CompareCompareOwn Home Loan
Competitive variable rates. Free extra repayments and redraws. No Lender’s Mortgage Insurance. Multiple offset accounts available. Fast digital application. 40% deposit required.
- interest rate
- 4.25% p.a.
fixed 3 years
- comparison rate
- 2.96% p.a.
- interest rate
- 4.25% p.a.
fixed 3 years
- comparison rate
- 2.96% p.a.
- upfront fees
- $250
- Ongoing fees
- $250.00 yearly
- Discharge Fee
- $300.00
- Extra repayments
- yes - free up to $20,000 per fixed rate term
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- -
- maximum borrowing amount
- -
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
Read our Mozo Review to learn more about the Own Home Loan
-
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
-
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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Mozo experts choice awards won:
- Fixed Rate Home Loan - 2022
- Home Lender Bank of the Year - 2022
Discount Great Rate Home Loan
LVR<90%, over $150k
interest rate
comparison rate
Initial monthly repayment3.09% p.a.
fixed 1 year2.28% p.a.Get one of the lowest rates on the market with this fixed rate mortgage. Available with just a 10% deposit. Guarantor option available. NSW, QLD and ACT residents only. Mozo Experts Choice Awards - Home Lender Bank of the Year 2022.
CompareCompareDiscount Great Rate Home Loan
Get one of the lowest rates on the market with this fixed rate mortgage. Available with just a 10% deposit. Guarantor option available. NSW, QLD and ACT residents only. Mozo Experts Choice Awards - Home Lender Bank of the Year 2022.
- interest rate
- 4.29% p.a.
fixed 3 years
- comparison rate
- 2.72% p.a.
- interest rate
- 4.29% p.a.
fixed 3 years
- comparison rate
- 2.72% p.a.
- upfront fees
- $180
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - fee applies
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 90.00%
- 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
Read our Mozo Review to learn more about the Discount Great Rate Home Loan
-
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 year2.76% 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
- 3.11% p.a.
- interest rate
- 4.19% p.a.
fixed 3 years
- comparison rate
- 3.11% 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
* 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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