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Common questions about our interest rates

An interest rate that fluctuates according to market conditions. Sometimes known as a floating interest rate.

No one loan is perfect for everyone. At Greater Bank, we understand that every one of our valued customers have different needs and are at different stages in their lives.

The right loan for you depends on these needs.

A variable rate loan means that the interest rate on the loan may go up and down over the loan period. This allows you to make additional or early repayments to take advantage of interest rate fluctuations.

A fixed rate loan means that the interest on the loan remains constant over a fixed period, so your repayments will stay the same. You will be able to budget for your repayments and are protected from rises in interest rates.

Still have questions? Contact a friendly Greater Bank staff member on 1300 721 253 or visit your nearest branch.

Break Costs

We understand your circumstances may change which might require you to payout your loan completely or change your fixed rate loan by changing the loan type. However to do so, you need to ‘break’ the terms of your loan contract. A break cost fee is intended to recover any loss that Greater Bank will incur when a customer breaks their fixed rate contract; which can happen as a result of changes in interest rates.

A break cost fee may be payable if the loan is repaid before the end of the fixed rate period, or if you switch to another loan type during the fixed rate period e.g. from a fixed rate to a variable rate.

The break cost fee is an estimate of the interest we should have received for the rest of the fixed rate period compared to the interest we would receive if we relend those funds. We compare the interest rate you locked into the equivalent current interest rate based on the time remaining on your fixed rate period.

If fixed interest rates have increased since you locked in your fixed rate, it’s quite possible that you won’t be charged a break cost fee. We only charge a break cost fee if we will incur a loss as a result of you breaking your fixed rate loan.

A simple version of the break cost formula is:

Break Cost = Loan Balance Owing x Interest Differential x Remaining Fixed Period

Simple example break cost calculations

Example 1

  • Loan balance of $300,000 with a fixed rate of 5.00% for 5 years, which is repaid after 2 years. The time remaining for the fixed rate term locked in is 3 years and the current 3 year fixed rate is 4.00%.
  • Break Cost fee = $300,000 x 1.00% x 3 years
  • Break Cost fee = $9,000 approximately

Example 2

  • Loan balance of $300,000 with a fixed rate of 4.80% for 5 years, which is repaid after 2 years. The time remaining for the fixed rate term locked in is 3 years. The fixed rate of 4.80% is the discounted interest rate (fixed rate less a discount of 0.20%). The current 3 year fixed rate is 4.00% and the equivalent current rate after allowing for a discount of 0.20% is 3.80%.
  • Break Cost fee = $300,000 x 1.00% x 3 years
  • Break Cost fee = $9,000 approximately

Example 3

  • Loan balance of $300,000 with a fixed rate of 4.00% for 5 years, which is repaid after 2 years. The time remaining for the fixed rate term locked in is 3 years and the current 3 year fixed rate is 5.00%.
  • Break Cost fee = $NIL approximately
  • A break cost fee would not apply as there is no loss, because we can re-lend the loan funds at a higher interest rate.

The interest charged depends on a variety of factors, such as the number of days in that month, the applicable annual interest rate and the unpaid balance of your loan.
Interest is calculated on the unpaid daily balance of your loan and is charged to the loan on a monthly basis (depending on which product you have). The interest rate applied each day is equal to your annual interest rate, divided by 365.

A comparison rate combines the:

  1.  loan interest rate you will be charged per year on the balance of your loan, with
  2.  the upfront, ongoing and final loan fees and charges you will also need to pay.
    The comparison rate can help you estimate the total cost of a loan over a year.

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