Changing interest rates on fixed term mortgage without break fee

[Chewbucca]

Thanks Rosco, you will also have to factor in the interest cost of the money borrowed for the break fee as you i'm going to have to stump up with $18K up front, but on the other hand, that 18K is a deductible expense and the 4K is classed as income. I guess it all even's out in the wash! The Break fee is based on like for like terms.

[FlyingKiwi]

Westpac just offered us $2K cash contribution (sign up for a further 2 years) and an interest rate of 4.35% for 12 months, through our mortgage broker.

[Rosco]

Are you sure you want to go so short? (ie 12 months)

Also 4.35% is the standard 1 year rate at ASB, so if you are in a good position, you aren't getting any real discount.

Ross

[FlyingKiwi]

Broker said there's talk of rates coming down... I guess one can't be too greedy. We have loan split into three terms (two year, three year, floating) and all of them in the 5 and 6%s.

[AlFa]

Currently trying to deal with Kiwibank regarding this topic. They totally suck - want $25k in ERC for 500k loan. worst bank ever

[Virtualbenz]

Hi Alfa hang in there, we have just been through this with Kiwibank and similar ERC $ and what we have learned is if you don't ask you don't get. If you just ask what the break fee is you get given a scary number and I think at that point most people go no further but you have options and for us they were worth pursuing.

Look at changing to another bank and see what they can offer, in terms of interest rates and cash contribution or go back to Kiwibank and say your thinking of switching and ask what they can do for you if you stay. This is what we did and we are still with them but much happier.

Did they just quote the ERC over the phone or email it to you? If you got an email it would have come from the lookafterme team and these are the ones you need to be speaking to rather the the home loans team as I think they have more ability to negotiate a deal. We couldn't budge them on the ERC but if pushed they can sharpen their rates and come up with a cash contribution to keep your business.

If you do decide to negotiate with Kiwibank do your homework first. Work out how much you could save a year on a better rate and what kind of loan structure you want (rate & term etc) and get them to put together a package built around this. Good luck

[AlFa]

I got this number through my mortgage broker. I have requested him to check with bank several times but not sure he did. As a result I changed the broker
Even more - I have lodged complaint with banking ombudsman. They have forwarded it to the bank and some dude already answered that they won't do sh1t about it

[AlFa]

Got the latest offer from the bank - they're still going to charge me $24k but offering $5k cash (though with clawback for 4 years) and giving some discounts on rates. With tax refund next year this exercise is gonna cost me around $13k. Savings between 6.29% and current 4.29% are $11k p.a. So just based on numbers seems to be good move to break.

[Giddy]

I finally got up the courage to ask what the break fee would be if we re-fixed and extended back out to 3 years at the current special rate of 4.49%

With mortgage of $200k they advised break fee of $4636. If that was added to our mortgage in our current situation that would increase our principal payments from about $105 per fortnight to $180 - but would take about a year to be back in the same position if we don't increase our payments which we are also considering. (used my trusty spreadsheet)

Is this worthwhile, or do we take the next step and talk to the other banks, or can we pretend we did and see what happens??

any thoughts greatly appreciated!


(Sorry, I probably would work this out myself, but just got back from my Nana's funeral to find a response from the bank and not quite in the right head space).

[Biglet]

I finally got up the courage to ask what the break fee would be if we re-fixed and extended back out to 3 years at the current special rate of 4.49%

With mortgage of $200k they advised break fee of $4636. If that was added to our mortgage in our current situation that would increase our principal payments from about $105 per fortnight to $180 - but would take about a year to be back in the same position if we don't increase our payments which we are also considering. (used my trusty spreadsheet)

Is this worthwhile, or do we take the next step and talk to the other banks, or can we pretend we did and see what happens??

any thoughts greatly appreciated!


(Sorry, I probably would work this out myself, but just got back from my Nana's funeral to find a response from the bank and not quite in the right head space).

I'm pretty keen to know the answer to this as we are considering breaking also

[Giddy]

Well, I went back to ASB and said we had been offered a transfer to another bank at 4.49%, and that they had offered to pay our break fee, and was told you should take that.

When I asked to speak to someone else this was reiterated, but an explanation of the 'cost to the bank' was provided.

Will definitely be shopping around when this term is up!

[primal]

I have yesterday fixed my loan for 1 year at 4.24% with kiwi bank. They were giving me their best rate of 4.39% but I negotiated it to 4.24%. You need to be very pushy with them to get as lower rate as possible.