Are there break costs when I refinance?
Sometimes, yes, break costs can apply when you exit a fixed rate business loan or a facility with a fixed term before it is due, though not every loan carries them. Variable rate facilities generally do not attract the same fees, while fixed rate loans, some leases and certain fixed term facilities often do. The amount varies a great deal by lender and by how much time is left on the facility, so it always needs checking on your specific contract, not assumed either way.
Why break costs exist at all
A lender that offers you a fixed rate is effectively promising to hold that rate for you regardless of what happens in the broader market. If rates move and you exit early, the lender can be left wearing a cost to unwind the funding that sat behind your facility, that is broadly what a break cost recovers. It is not a penalty for bad behaviour, it is closer to compensation for breaking a contract early. The same idea shows up in home loans, though the calculation on a commercial facility can look quite different in practice.
How to weigh it up
- Ask the current lender for the exact figure, not an estimate, in writing
- Work out the total savings from refinancing over the remaining term
- Check whether the new lender will contribute anything towards exit costs
- Factor in any other fees, discharge, valuation or establishment costs on the new side
Most of the time a break cost is not a reason to abandon a refinance altogether, it is simply a number that belongs in the sums. A refinance that still saves money once the break cost is included is usually still worth doing, one that does not probably is not.
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Last updated 15th July 2026. Reviewed by Authorised Credit Representative 554584 of Australian Credit Licence 414426.