Hi,
Just wondering if there is any up-to-date info on the Governments potential new policy on preventing banks charging over the top break fees? I would like to re-finance next year but would have to pay around $17K which is out of the question.
Cheers,
Brad.
Governement legislation in Home Loan break fees.
- Otto Dargan
- Mortgage Specialist
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Re: Governement legislation in Home Loan break fees.
At this stage it looks unlikely to be passed.
The reason being is that there are several types of lenders that need high exit fees to remain profitable. The reality is that the cost of setting up a loan is far higher than the setup fees charged to customers, if there aren't exit fees then the lenders will lose out. Exit fees will need to be reasonable under the NCCP legislation that has already been passed and comes into effect for banks on the 1/1/2011.
As for fixed loan exit fees it looks like these will not be covered under any new or proposed legislation. Banks do actually have a cost when a fixed rate is repaid early as they borrow on the wholesale markets to fund them and they cannot repay the loan early, they need to hold it until the term is complete. So this is a very real expense.
The problem I have with the exit fees for fixed rate loans is that many people are not told about the possibility of high exit fees. That is simply irresponsible lending.
The reason being is that there are several types of lenders that need high exit fees to remain profitable. The reality is that the cost of setting up a loan is far higher than the setup fees charged to customers, if there aren't exit fees then the lenders will lose out. Exit fees will need to be reasonable under the NCCP legislation that has already been passed and comes into effect for banks on the 1/1/2011.
As for fixed loan exit fees it looks like these will not be covered under any new or proposed legislation. Banks do actually have a cost when a fixed rate is repaid early as they borrow on the wholesale markets to fund them and they cannot repay the loan early, they need to hold it until the term is complete. So this is a very real expense.
The problem I have with the exit fees for fixed rate loans is that many people are not told about the possibility of high exit fees. That is simply irresponsible lending.