What are break fees?
Typically when you sign a mortgage contract, there is a fixed and variable rate attached to your loan. Every loan, though, is different and has varying requirements. If your lender requires a fixed-rate interest term for a few years, you will need to repay the loan at the rate. Breaking your loan term early on a fixed-interest rate mortgage can lead you to a break fee. These fees are large and extremely expensive since they adjust the interest you have not paid on the terms left.
Banks are businesses that want to make money off of the money they lend and add interest to their customers. If a contract is broken, even if it is repaid in full, a charge is added. It can be confusing to try to figure out how to calculate what you will owe, but some free online calculators are quick.
Mortgage House offers excellent and unique solutions to all customers looking for a loan. Home loans have unique packages. You can get a fixed-rate loan for a few years, usually three years, and then transition to a variable-interest-rate loan for the remainder of the term. Break fees occur also if you refinance your loan or switch to a new lender.
Break Fees Conclusion
Overall, break costs and fees occur when you break your mortgage contract. These contracts are legally binding and have consequences. To calculate the potential break fee cost, find a free calculator and input basic information about your loan terms.