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Early Repayment Fees and Charges for Mortgages

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| 06 Dec 2010, 02:36 AM Agree 0
Have you ever been stung by your lender for discharging an early mortgage. Interested on who the lender was and how much it cost you.

For instance, a friend of mine has just left the CBA and was charged $700.00 per loan product and he had 3 seperate products, so it cost him close on $3,000 to leave the CBA, even though he only had the one mortgaged property. The CBA charged early repayment fees on each seperate products up to 4 years, (not a one off fee accross all products) and they charged a $350 discharge fee on top of that as well.
  • nick1 | 06 Dec 2010, 03:04 AM Agree 0
    Not to nit-pick but 3x700 is a lot closer to 2000 than 3000. Saying that, its sounds about consistent with what I paid for leaving my last bank. Honestly I think 2100 is a reasonable amount to charge for moving three mortgages.
  • Pablo | 07 Dec 2010, 09:11 AM Agree 0
    The cost of refinancing can sometimes be very steep so refinancing must be approached with caution. Always ensure that there is a good reason for refinancing eg better service or products that will help your property investing move forward when things start to get tight.

    If it comes down to interest savings I normally only recommend clients refinance if they recoup their costs within 2 years.

    There are currently a few specials out there offering rebates to help cover the cost of refinancing and others offering free / reduced application fees so those looking to refinance should take advantage of these products if they suit their overall needs.

    Please note that comments given are general in nature and should not be considered advice as they do not take into account all of your personal circumstances
  • Jeano | 28 Jan 2011, 04:04 PM Agree 0
    My family was chargesd 13k to move from Bank SA
  • patchy | 30 Jan 2011, 09:48 PM Agree 0
    13k??? Seriously? What was that made up of?
  • Jeano | 01 Feb 2011, 02:09 AM Agree 0
    Hi Yes horrible for a young couple Just the Exit Fee Cost, a money graber for the bank
  • Pablo | 01 Feb 2011, 02:30 AM Agree 0
    Jeano, that's a huge amount.

    I take it that they were in a fixed interest loan so had the extra break costs to pay?
  • Jeano | 01 Feb 2011, 02:45 AM Agree 0
    Hi Guys sorry Yes they needed to sell as they had relocated for work but they had had the loan for a quite a few years, (thought they had refinanced prev) and they could not get the new house with that lenders as the wife was only on part time income though the hubby is on a good salary, so they had to go elsewhere, thought they had been told if they refinanced with the current lender the fee would be vaived, but they couldn't and when they went to check there a/c after the house had settled there was the 13k less in there
  • Jeano | 01 Feb 2011, 02:47 AM Agree 0
    As with the intrest I know they usually fix but at that time I thik it was variable
  • Pablo | 01 Feb 2011, 03:02 AM Agree 0
    They probably had to pay a new lenders mortgage premium, which unfortunately would have been triggered by them changing lenders and having a high loan to value ratio.

    In my opinion the government shouldn't be just concentrating on eliminating exit costs rather they should also be making the LMI premiums transferable between lenders. I have far more clients choose not to refinance due to LMI costs than any other reason.
  • Mick C | 08 Feb 2011, 01:15 AM Agree 0
    My family was chargesd 13k to move from Bank SA

    wow that's HUGE!
    i would think it be more benefical to stay with the lender for atleast 4 -5 years ( fter 4-5 years the break fee is close to nil)

  • Herman | 16 Mar 2012, 06:48 AM Agree 0
    No i never stung by lender for discharging an early mortgage but one of my friend have faced it.
  • JoemelY | 01 Aug 2012, 10:35 AM Agree 0
    You have no guarantee that you will have sufficient funds to pay off the mortgage at the end of the repayment period, as the pension fund could perform below expectations.
    If you lie on your real estate loan application, it's mortgage fraud. Even tiny white lies constitute mortgage fraud. But many borrowers hedge a little there, puff a little here, often because they don't know any better or, worse, because a real estate professional suggested it's no big deal.
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