Easier exit from home loans from July 2011

14 December, 2010

Exit fees are charged by a number of lenders to protect against borrowers repaying their loan in full early – usually within the first three years. While a number of banks, such as ANZ and NAB have already removed exit fees, the reforms mean that all banks and non-banks will need to follow suit for new lending.

“The removal of exit fees will hopefully make lenders listen more carefully to existing customers’ needs. There will be one less obstacle for borrowers to overcome if they want to leave the relationship early.”

“This particular banking reform is a message to borrowers that assessing your home loan on a regular basis – rates; structure; fees, service – is a positive practice. Every year at least, sit down, review the market and see whether your home loan provider still stacks up.”

“Banks and non-banks have to work hard to get your business in the first place; they should continue to work hard to keep it,” says Jackson. 

Keep in mind, exit fees are not break costs – break costs apply to fixed rate mortgages where a borrower wants to change their mortgage structure or provider part way through the fixed term.