Fixed Rate Break Cost Calculator
Estimate the cost of exiting a fixed rate home loan early — and understand whether break costs apply to your situation.
| Break Cost Applies? | — |
| Rate Difference | 0% |
| Remaining Fixed Term | 0 years |
| Loan Balance | $0 |
Understanding Fixed Rate Break Costs in Australia
A fixed rate break cost — sometimes called an Early Repayment Adjustment (ERA) — is the fee a lender charges when you exit a fixed rate home loan before the fixed term ends. It arises because the lender funded your loan in the wholesale money market at a rate matching your fixed rate. When you break early, they must re-deploy those funds at the now-lower current rate, incurring a loss that they pass on to you.
When Do Break Costs Apply?
Break costs only arise when current interest rates are lower than your fixed rate. If rates have risen above your fixed rate since you took it out, the lender actually benefits from your early exit (they can re-lend at a higher rate), and most lenders charge no break cost in this scenario. This is why break costs were common after the pandemic low-rate period of 2021–22 and have been less significant as rates rose through 2022–2024.
How Break Costs Are Calculated
Lenders use a proprietary formula based on their actual wholesale funding costs, not the advertised rates. The simplified industry formula is:
Break Cost = (Fixed Rate − Current Wholesale Rate) × Loan Balance × Remaining Years
This is an approximation — the actual break cost from your lender may differ based on their specific wholesale funding rates (which differ from published rates), the exact days remaining, and their internal calculation methodology. Always request an exact break cost figure directly from your lender before making any decisions. The figure from this calculator is an estimate for planning purposes only.
Should You Pay the Break Cost?
Whether paying a break cost is worthwhile depends on comparing it against the savings from refinancing. If your break cost is $10,000 and refinancing saves $400/month, break-even takes 25 months. If you have only 12 months left on the fixed term, waiting is almost certainly the better financial decision. Use our Refinancing Calculator to model the ongoing savings and compare against the break cost shown here.
Common Triggers for Breaking a Fixed Rate
Borrowers most commonly consider breaking a fixed rate when: they want to refinance to a lower rate; they're selling the property; they want to make large extra repayments beyond the annual cap; they need to access equity; or their circumstances have changed (e.g. job loss, divorce, inheritance). In all cases, get the exact break cost from your lender first before proceeding.