We may charge Early Repayment Recovery (sometimes called a ‘break fee’) if you choose to repay or restructure your ANZ Home Loan with a fixed rate during your fixed rate period.
The amount we charge varies depending on our loss at the time when you repay or restructure your fixed rate loan.
Early Repayment Recovery is based on the economic loss to ANZ of repaying or restructuring (in full or part) your ANZ Home Loan with a fixed rate as set out in your ANZ loan agreement.
If you’re repaying some or all of your loan early during a fixed rate period, you may have to pay us Early Repayment Recovery.
You may also need to pay Early Repayment Recovery if you break your loan agreement and we ask you to repay all of your loan early during a fixed-rate period.
You may also need to pay us Early Repayment Recovery if your loan has a fixed interest rate and either of the following apply:
- you’ve asked us to give you a different loan type or interest rate type, including another fixed interest rate
- you’ve asked us to change the repayment date or type, frequency, or amount of your scheduled loan repayments.
We give you a fixed interest rate on the basis you won’t make any changes to your loan during the fixed-rate period. If you ask us to make changes to your loan during a fixed-rate period and we agree, we’ll give you a new loan with the changes you’ve asked for.
If you have an ANZ Home Loan with a fixed rate, there are a couple of ways you can make extra repayments without being charged an Early Repayment Recovery:
- If it’s the first increase that year, you can increase your regular repayments towards your home loan by up to $250 a week.
- Plus, each year you can make an extra lump sum repayment that’s no more than 5% of your current loan amount.
The year runs from the date, or the anniversary of the date, that your fixed rate period started.
We use mathematical formulas when we calculate Early Repayment Recovery.
We’ve set out below a short explanation of the mathematical formulas we use when we calculate Early Repayment Recovery.
We compare two amounts:
- The first amount: We calculate the sum of all the scheduled loan repayments and interest charges that would have been made over the remaining part of the fixed-rate period. We calculate the interest charges using the wholesale swap interest rate which applied for the term of the fixed-rate period when the fixed-rate period started. However, if you entered into a Reserve Rate Agreement before the fixed-rate period started, we use the date of that Agreement instead.
- The second amount: We calculate the sum of all the scheduled loan repayments and interest charges due over the remaining part of the fixed-rate period after you have made your early repayment. We calculate the interest charges using the wholesale swap interest rate which applied for the term of the fixed-rate period when the fixed-rate period started. However, if you entered into a Reserve Rate Agreement before the fixed-rate period started, we use the date of that Agreement instead. We then add this amount to the overpayment amount that you’re repaying early.
We adjust the first amount to recognise that we receive the money now, instead of receiving it as income over the loan term. When we adjust the first amount, we use the wholesale swap interest rates applying to the remaining part of the fixed-rate period on your loan when it is repaid early, as calculated by us. We also take into account the amount you would have owed on your loan at the end of the fixed-rate period.
Sometimes, there may not be an exact match between the term of your fixed-rate period, or remaining fixed-rate period, and publicly available wholesale swap interest rates. If this happens, we’ll calculate the exact wholesale swap interest rates that will apply.
Once we’ve adjusted these amounts, we’ll charge you the difference between the first amount and the second amount as Early Repayment Recovery. We’ll only charge you Early Repayment Recovery if the first amount is higher than the second amount.