How to avoid extra home loan fees

Exit and early termination fees can put the brakes on plans to sell, to refinance, and to renovate or purchase  an investment property. Here’s how to avoid them from the start.

It can be difficult avoiding early termination fees on fixed rate loans, as they protect your lender against the loss of the interest they reasonably expected to earn on your finance.

Different lenders will have different policies in relation to early repayments. Fees can be waived upon request but some lenders prefer to charge them. To avoid early repayment fees in the future, it is a good idea to take extra precautions when deciding to take a fixed term home loan.

Fees on fixed rate home loans may include exit fees and early termination fees. Exit fees can range from $150 to $350. Early termination fees can be more costly and are charged against fixed rate home loans that are exited before the fixed rate term has been completed. They can be charged in a number of situations, including switching home loans or making extra repayments on your home loan.

The key thing to consider is whether to go for a variable rate or a fixed rate home loan. If you do take a fixed rate mortgage, you will effectively be locking in the fixed rate term, and the fixed rate interest periods for whatever the term is. That means that it’s not an appropriate product for someone who wants to pay out their loan early.

Consideration needs to be given to your future goals. Do you have plans to move city or change your job? Are there any foreseeable disruptions to your financial circumstance likely to take place during the space of your fixed term rate?

Avoiding exit fees on home loans ultimately comes down to understanding the products you are able to choose from and being clear about what you are signing up for. It is recommend that customers get some help when they are seeking out their next home loan. A Mortgage Broker will be able to provide a really good service for customers in that regard.

To avoid being caught out by fees and charges, speak to your trusted Mortgage Broker about the different types of loans and how to match one to your plans for the future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.