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Will I have a fee to pay off my loan early?

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 This will depend entirely on the type of loan and the lender as the fees and charges can vary substantially. It is very important that you take the time when applying for a loan to understand exactly what the restrictions are for either paying off the loan early or switching to another lender. Your mortgage broker will go over these fees with you in detail however as an example a lender may charge what is called a Deferred Establishment Fee. As a general rule these may apply only for the first 4 to 6 years and are can either a set fee of approximately $700 or a percentage of the loan amount. We have seen some of these fees reduced recently however it is still a significant cost to bear. In both cases you should know exactly where you stand up front so it should come as no surprise if you discuss all fees and charges when signing the loan documentation. The Economic Break Cost fee is a little harder to work out up front and is only applicable if you have a fixed rate loan. The banks have a calculation and this will vary almost on a daily basis and will fluctuate with the current market rates. Really the only way to work this out to ensure it is done correctly is to have your bank calculate this cost for you as an indicative figure to give you break cost before you make the decision to pay the loan off early.

 

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