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 13 13 86 or visit your nearest branch.

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

Here are some example break cost calculations:

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% p.a. 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% p.a.
• 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% p.a. 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% p.a. is the discounted interest rate (fixed rate less a discount of 0.20%). The current 3 year fixed rate is 4.00% p.a. and the equivalent current rate after allowing for a discount of 0.20% is 3.80% p.a.
• 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% p.a. 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% p.a.
• 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.

To calculate a pre-payment fee we take the extra payment over and above the 5% of the original loan amount and times it by the remaining fixed period and then times it by the interest differential.

Let’s look at an example:

For a $1,500 loan pre-payment, with a remaining fixed period of 2 years and an interest differential of 0.25%, the calculation is:

$1,500 X 2 X 0.25% = $7.50

Or, $1,500 times 2 times 0.25% equals a $7.50 pre-payment fee in this example.

A prepayment fee may apply to extra repayments you make over and above the 5% threshold.

A fee only applies if the current rate we could relend those funds at for the remainder of your fixed term is lower than the rate your loan is fixed at.

The fee, if applicable, is charged to your loan account at the end of the month that the extra payment is made.

When this fee does apply, it will only represent a small portion of the interest you may save by making the extra payment.

Even though your loan will be debited with a fee, it may still be beneficial to make the extra payment and reduce the interest charged to your loan.

Please take into account your own individual circumstances when making any extra payments.

Example 1 – no pre-payment fee

• Original loan amount: $150,000 fixed for 3 years @ 7.0% p.a.
• Extra payments made that month: $6,500

In this example, no prepayment fee will apply.

The total amount of extra payments is less than 5% of the original loan amount ($7,500).

Example 2 – pre-payment fee applies

• Original loan amount: $150,000 fixed for 3 years @ 7.0% p.a.
• Extra payments made that month: $9,000
• Remaining Fixed Period: 2 years
• Current 2 year Fixed Rate: 6.75% p.a.

In this example, a prepayment fee will apply.

The total amount of extra payments is greater than 5% of the original loan amount and the current fixed rate for the remaining fixed period of the loan is lower than the rate that the loan is fixed at.

Note: Pre-payment fees don’t apply to an extra repayment on a variable rate home loan.

Yes, but it's important to be aware that during a fixed period, for Principal and Interest and Interest Only loans, a pre-payment fee may apply.

You're able to make extra repayments on these loans until you reach 5% of your original loan amount before a prepayment fee may apply.

Changing from one Greater Bank Home Loan Product to another is easier than you might think.

Get in touch with us today to see what our lending staff can do to make life greater?

• Make a loan enquiry online now
• Call 13 13 86 and we’ll schedule a time with one of our Lending Managers 
• Visit your nearest branch to speak with your local Lending Manager

Note: Fixed Rate break costs and Conversion fees may apply.