What is a break cost?

If you've come into some money and want to pay off a large portion of your fixed rate loan, or you want to get a lower interest rate, you will need to pay a break cost. This cost is the difference between the wholesale interest rate when Westpac first borrowed from the market (all banks borrow from the wholesale market to fund home loans) compared to the wholesale interest rate on the date which you are prepaying the fixed loan.

Reasons to break your fixed rate home loan.

Breaking to get a lower interest rate

Breaking your fixed loan to get a lower interest rate means you can reduce your repayments. While this may sound attractive, it's important to check that the money you're saving with a lower rate outweighs the break cost for your loan. You can either do the calculation yourself or we can help walk you through your options.

Breaking to change your term

If your circumstances change, it's possible to break your fixed loan to change your term. By extending your term, you're paying off your loan over a longer period. While this means you can reduce your minimum repayment, you'll also end up paying more in interest overall so it's worthwhile considering how much you'll end up paying in the long term.

Breaking when you're selling

If you're selling your home and buying a new one, you can often transfer your Westpac home loan to your new place, without incurring any break fees. Please talk to us to discuss your options. If you're planning to repay your loan once you've sold your home, you may decide to break your fixed rate home loan before settlement, and put the loan on a floating interest rate and pay the break costs you've been quoted. This will lower the risk of paying higher break costs if interest rates have fallen between the time you got the quote and reach settlement.

Breaking if you've come into money

If you've come into some money, such as an inheritance or bonus, you may choose to break your loan at this point. Putting this lump sum on your home loan potentially means the interest saved over the course of your loan could outweigh the break fee charged.

Tools to help.

Calculate home loan repayments

See what your monthly repayments could be with different Westpac home loans and rates.


How break costs are calculated

If you're considering breaking your fixed rate home loan, see how break costs are calculated.

Find out more

Reduce repayments in other ways

Discover how you can reduce monthly repayments without breaking your fixed rate home loan.

Find out more

Get in touch.

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Things you should know.

Westpac's home loan lending criteria and terms and conditions apply. An establishment charge may apply. A low equity margin may apply. An additional fee or higher interest rate may apply to home loans if the application is accepted but does not meet the standard lending criteria.

Documents and fees

View terms and conditions for all our home lending products here.