Hi Michelle P,
Removing a borrower’s name from a
fixed rate loan without incurring
early repayment adjustment or break fees can only be considered if the borrower is going through a divorce/marital separation. It can allow you to alter the home loan without incurring a substantial cost if a new loan is written. You’ll need to apply for a refinance of your home loan with your current lender.
In most cases, it’s the same cost to
refinance your mortgage and pay the break fees as it is to continue paying a higher rate until the end of the fixed rate term.
For example, if you fixed your loan at 9.00%, you have one year left on your fixed rate and banks are currently offering rates of 6.00% then paying a break fee may make you reconsider refinancing.
However, if you’re paying a higher rate for the next year, when you do the math, it usually means that over the next year you pay the same amount in additional interest as you’d have paid in a break fee.
For this reason, it normally makes sense to refinance or sell your property if you need to do so but it doesn’t make sense to refinance if you’re just trying to save money.
A specialist mortgage broker can help you through the process when removing a partner’s name from a fixed rate loan.
Give us a call on
1300 889 743 or fill in our
free assessment form to find out if you qualify for a refinance.
Cheers,