Can I swap out of a fixed rate mortgage at Bank X and move to Bank Y at the same old fixed rate and therefore have the new bank effectively pay the old bank for the mark-to-market on the fix-rate break costs?
In a way yes if you find a lender that offers some form of a cash back but that will cover part of your refinance costs but not all of your break costs.
Best to speak with a mortgage broker to fully assess your situation.
Hope that helps.
Great and interesting question Jason
In terms of moving from one lender to another and the new lender covering the break cost I would suggest that might an interesting negotiating position you could use by dealing directly with the new lender.
If you don't have the time to deal directly I'd suggest contacting a few mortgage brokers to see what fixed can rate options they could negotiate for you. If you were able to borrow the fixed rate costs and obtain a lower fixed rate you may well be able to save money in the long term.
If you do deal directly with a lender, try and get a better rate and if they accept your proposition of covering the break costs i'd love to get your feedback.
Hope this helps
Hi Jason, the simple answer is no. The new lender may offer a rebate but if the fixed rate has any significant break costs its never going to equal out.
The exception to this could be loan size.. for a large enough loan.. maybe something could be negotiated. The question is why..
The main reason for the swap is usually a compelling deal being available with another lender. You have suggested "the same old fixed rate", so I would be interested to understand why you wanted to switch banks.
As others have said, some lenders offer either a cash back or other incentive which may help to cover the break costs.
Speak to an experienced broker and discuss what your goals are and you should be able to structure the deal you are after.
I just read your additional comments, is this a commercial/business transaction? Either way, it would be a good idea to complete a cost benefit analysis for breaking the fixed contract.
Per previous comments, you may be able to amortise the cost, but I'm not sure any bank will cover it.
We recently negotiated on a similar issue for one of our commercial clients. Application and setup costs were circa $30k, we were able to get this down to $4k which took away some of the initial "pain".
Happy to help.
Effectively it can work out that way as many lenders are offering cash back incentives to switch to them.
If you want I can look at your current loan break costs vs savings on switching to a lender with a more comparative rate. There are rates as low as 3.69%.