Short YouTube discussion (hosts: Aaron Carina and Karina) about the costs and considerations when breaking a fixed mortgage rate. They explain that break costs depend on remaining term, outstanding balance, and the gap between old and new interest rates, and note bank cashback refinance specials (St. George: $4,000 + $2,000 per additional property; ANZ reportedly increased cashback to $4,000) that can offset break costs. The video closes with an offer to run numbers for viewers.
Hey, it's Aaron Carina from Diagnostics and Finance. Coupled with short videos around fixed rates, breaking the fixed rates and something in regards to getting those low to mid 2% where you might still be stuck at 5. So breaking your fixed rate. What would be involved in breaking your fixed rate, Karina?
So the first thing that we would want to be looking at for you is how much those break costs will be. So basically if you're still within your fixed rate term, the bank is going to be looking to obtain some funds from you for leaving them or breaking up with them early. So they want to get something out of you before you go. So what we'd want to do is find out what those costs are, have a look at what your existing loan balance is, how long you've got left on your fixed term and we'll need to do some calculations to actually see if it's viable and cost effective for you to make that change.
And there's something to do with the interest rate as well. The bigger the gap, it may not be that you pay a small fee because you're only a couple of months away from the fixed rate expiring. It may be because you've got a big gap between what you're currently paying and what the new rate's going to be that could actually put your fees up higher than say a small gap between say half a percent gap between your fixed rate and the current rate. So it's also to do with the gap of the current rate as well. The other thing, there's some funky specials going on with about 3 of the banks at the moment that can help with break costs. What are they at the moment there?
So you might have seen around or if you haven't, here's a breaking news for you. St. George are offering $4,000 cash back for refinances of their first property and an extra 2,000 for each property, extra 2,000 for each property after. So if you've got two properties your owner occupied and an investment, you're looking at about a six thousand dollar cash back from the bank. We've got Anz as well. So I think they've just increased their cash back to four grand as well. So there's some specials out there that you know, the banks are really putting an incentive for you to review your home loan and if you do have some break costs that are, you know, a couple of thousand dollars, one, we want to make sure that if we are moving you that it's going to be cost effective and you actually will see some savings in your pocket, which is really important at this time.
I think it is. And we usually do refinances without the cash back refinance rebates. But it's. It's probably even more important if you've got a fixed rate, to look at some of these cashback rebates, because it'll neutralise the cost and get you into a better stead. Most of the time, there isn't a refinance rebate and we have to accommodate the calculations into the interest savings. And most of the time that is achievable. And especially today, it's very, very achievable.
Yeah, I definitely think so. All right, cool. Well, give us a call and we'll left have a look, run the numbers.
