Break fee arithmetic
Does breaking your fixed rate clear its own cost?
Enter the break fee your lender quoted you and this works out what you would actually be left with over the rest of your fixed term. It will not guess your fee, and it will not tell you what to do — both for the same reason, which is that neither would be honest.
Savings are counted only to the end of your current fixed term. After that the loan refixes at rates nobody can know today, so projecting further would inflate the number. This is a calculation, not financial advice — see our disclosure.
What actually drives the answer
Three things, and only one of them is the rate.
How long is left
A fee buys you the rest of your fixed term at the lower rate and nothing beyond it. Eighteen months left gives the saving room to clear the fee. Three months rarely does, at any gap.
The size of the gap
Not the new rate on its own — the distance between it and what you are on. A 1.6% gap on $500,000 is roughly $8,000 of interest a year. A 0.2% gap is roughly $1,000.
Which direction rates moved
Your lender funded your fixed loan at the wholesale rate of the day. It can only lose, and only charge, when rates have fallen since. When they have risen, the fee may be very small or nothing at all.
Where do I get my break fee figure?
Ask your lender. It is a free request and it does not commit you to anything — you are asking what it would cost to break, not asking to break. Most will quote it while you are on the phone or send it the same day. The figure is only good for a day or two because it moves with wholesale rates, so get it close to when you would act on it.
Why does this only count savings to the end of my fixed term?
Because after that date the loan refixes at whatever rates exist then, and nobody knows what those are. Counting a saving over the whole remaining mortgage assumes today’s gap holds for years, which flatters the answer badly. The honest comparison is the period you are actually buying with the fee.
Does it tell me whether to break?
No, and it cannot. Recommending that you break, refix or stay is regulated financial advice in New Zealand and needs a licence this site does not hold. What you get is the arithmetic, laid out so you can see what drives it. A licensed adviser makes any recommendation — and the upside of that constraint is that nothing here is angled toward a particular answer.
What else should go in "other costs"?
Anything payable only because you moved. If you are changing lender: legal fees for discharge and re-registration, commonly $800–$1,500, and a registered valuation if one is required, $700–$1,000. If you took cashback in the last three to four years, some or all of it may be repayable. Refixing with your existing lender usually has none of these — it is the break fee alone.
The new lender is offering cashback. Does that not just pay the break fee?
Sometimes, and it is counted here — but separately, and not in the headline figure. Cashback is cash now in exchange for staying three to four years, while everything else on this page is measured over the months left on your fix. Folding a four-year commitment into a twelve-month comparison is exactly the arithmetic that makes a bad move look good. Leave inside the minimum period and some or all of it is repayable, at which point it was never income. Our cashback page works through a case where the loan paying $3,500 cashback cost more over the term than the one paying none.
My repayment will drop at the lower rate. Why does the calculator hold it steady?
Because holding it steady is what makes the two scenarios comparable, and it is what most people do. At the lower rate the same payment retires more principal, so the saving shows up as a smaller balance rather than spare cash. If you did drop your repayment instead, the interest saved is the same — you would just take it as cashflow rather than as principal.