Fixed-rate break-cost traps

Check a written fixed-rate break fee against the savings of switching before the fixed period ends. See which fees to include and how to request a payout quote.

Fixed-rate break fee calculator for a written quote

Compare staying on your fixed rate until expiry with switching now. This estimates how much of the lender's quoted fee the interest and fee savings could cover before your fixed period ends.

Worked example using hypothetical quotes.

Stay until expiry (18 months): $45,931.45
Switch now, including quoted fees: $45,486.82

Break-even break fee: $2,944.63.

Switching now costs $444.63 less by fixed expiry.

Both loans use the same balance and remaining term, monthly principal and interest and unchanged rates. Costs are interest and fees. Enter only one-off charges paid in cash to switch now, including any discharge or establishment costs, and avoid counting the break fee twice. The estimate excludes offsets, financed fees and costs or rates after fixed expiry.

6 min read·Reviewed 11 November 2026·Ratesniffers Editorial Team

What is a break cost on a fixed home loan?

A break cost is a charge that may apply if you leave a fixed rate early or make repayments above your lender's allowance. Lenders such as Westpac and CommBank describe it as a way to recover a loss on fixed wholesale funding. A change in an advertised home loan rate or the RBA cash rate alone cannot tell you what the charge will be.

What's today's fixed-rate curve, and what does it mean for your break cost?

A break cost grows with the gap between your locked rate and where the market sits now for your remaining term, so the actual curve matters more than the general direction of rates. Here is today's verified owner-occupier P&I average and lowest rate by fixed term, across the 26+ lenders Ratesniffers tracks (November 2026). If your own fixed rate sits well above the current average for a shorter remaining term, a break-cost quote is worth asking for before you assume refinancing clears the gap for free.

Fixed term	Average verified rate	Lowest verified rate
1-year fixed	6.63% p.a.	6.14% p.a.
2-year fixed	6.66% p.a.	6.24% p.a.
3-year fixed	6.78% p.a.	6.24% p.a.
5-year fixed	6.98% p.a.	6.49% p.a.

Is it worth paying a fixed-rate break fee to refinance early?

In the hypothetical example above, the break-even fee is $2,944.63. A $2,500 quote leaves $444.63 in estimated savings over 18 months on a $500,000 loan with 25 years left. The example includes $800 of other switching costs and assumes both interest rates stay unchanged.

What triggers a break cost?

Most borrowers don't fix planning to break, but life changes. The common triggers are worth knowing before you lock in.

Action during the fixed term	Break cost risk
Refinancing to another lender	May apply on the remaining fixed balance
Selling the property	May apply if the fixed loan is paid out. Ask about portability.
Large extra repayments above the cap	May apply above the allowance in your contract
Switching to variable early	May apply when the fixed period is ended early
Staying put to the end of the term	No early break fee for reaching expiry. Other exit fees can apply.

Ask the lender for the break fee and other payout charges in writing. Confirm which date the quote covers and what can change before settlement.

How do you avoid being trapped by a fixed rate?

Ask how the lender calculates the fee and how long its quote is valid.
Selling, refinancing, or overpaying can all trigger them.
A split loan keeps flexibility on the variable portion.
Ask for a written break-cost quote before exiting a fixed rate.

Fixed-rate break-cost traps: frequently asked questions

What is a break cost on a fixed home loan?

Is it worth paying a fixed-rate break fee to refinance early?

Compare interest and fees until the fixed rate expires. Subtract the cost of switching, excluding the break fee, from the cost of staying. A positive difference is the most you can pay in break fees and still break even. Use your written quote and the same loan term for both options. In the hypothetical example above, the break-even fee is $2,944.63. A $2,500 quote leaves $444.63 in estimated savings over 18 months on a $500,000 loan with 25 years left. The example includes $800 of other switching costs and assumes both interest rates stay unchanged.

What triggers a break cost?

Most borrowers don't fix planning to break, but life changes. The common triggers are worth knowing before you lock in.

How do you avoid being trapped by a fixed rate?

Fix only the portion of the loan you're confident you'll hold for the full term, and consider a split so the variable portion keeps an offset and extra repayments. Check the lender's extra-repayment cap before you overpay a fixed loan. If you think you may sell or refinance within the term, the certainty of fixing has to be weighed against the risk of a break cost that can wipe out the benefit. Key points: Ask how the lender calculates the fee and how long its quote is valid.; Selling, refinancing, or overpaying can all trigger them.; A split loan keeps flexibility on the variable portion.;…

References

ASIC MoneySmart: Choosing a home loan, Break-cost and fixed-rate consumer guidance
Westpac: What is a break cost?, Wholesale funding, quote and payout mechanics
CommBank: Early Repayment Adjustment guide, Adjustment and administration fees are separate