Break Fixed Term Mortgage Calculator
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Reviewed by Calculator Editorial Team
A Break Fixed Term Mortgage allows you to exit your fixed-rate mortgage before the term ends, typically with a fee. This calculator helps you estimate the cost and compare options.
What is a Break Fixed Term Mortgage?
A Break Fixed Term Mortgage is a type of mortgage that offers a fixed interest rate for a specific period, after which the rate may change. The "break" feature allows you to exit the mortgage early, often with a fee.
These mortgages are popular because they provide stability during the fixed period, while offering flexibility to switch to a different rate if needed.
Key Features:
- Fixed interest rate for a set period (e.g., 2, 5, or 10 years)
- Option to break the mortgage early with a fee
- Typically lower initial rates than variable rate mortgages
- May include penalties for early repayment
How to Break a Fixed Term Mortgage
Breaking a fixed term mortgage involves paying a fee to your lender to exit the agreement early. Here's what you need to know:
Steps to Break Your Mortgage
- Contact your lender to discuss breaking the mortgage
- Understand the break fee and any additional costs
- Complete the necessary paperwork and pay the fee
- Switch to a new mortgage product if required
Break Fee Calculation:
Break Fee = (Remaining Balance × Break Fee Rate) + Administrative Fee
Breaking a fixed term mortgage can be beneficial if interest rates have fallen significantly, but it's important to weigh the costs against potential savings.
Examples of Breaking a Fixed Term Mortgage
Let's look at two scenarios to illustrate how breaking a fixed term mortgage might work:
Scenario 1: Breaking After 3 Years
You have a £200,000 mortgage with a fixed rate of 3.5% for 5 years. After 3 years, you decide to break the mortgage with a 3% break fee and a £500 administrative fee.
Break Fee = (£200,000 × 0.03) + £500 = £6,000 + £500 = £6,500
Total Cost = £6,500 (break fee) + £500 (admin) = £7,000
Scenario 2: Breaking After 5 Years
You have a £300,000 mortgage with a fixed rate of 4.0% for 5 years. You break the mortgage at the end of the term with a 2% break fee and a £1,000 administrative fee.
Break Fee = (£300,000 × 0.02) + £1,000 = £6,000 + £1,000 = £7,000
Total Cost = £7,000 (break fee) + £1,000 (admin) = £8,000
FAQ
- What is the typical break fee for a fixed term mortgage?
- The break fee varies by lender and can range from 2% to 5% of the remaining balance, plus administrative fees.
- Can I break my fixed term mortgage at any time?
- Most lenders require you to break the mortgage after a certain period (e.g., 6 months to 2 years) from the start of the fixed term.
- What happens if I don't break my fixed term mortgage?
- Your mortgage will automatically switch to the lender's standard variable rate or another product they offer.
- Is it always better to break a fixed term mortgage?
- Not necessarily. You should compare the break fee with potential savings from lower interest rates before deciding.
- Can I break my mortgage and get a better rate?
- Yes, many lenders offer better rates to customers who break their fixed term mortgages.