Costs incurred when a loan is paid off before the end of its term. Generally only applied to fixed rate loans. The Federal Government has limited when and how much these fees can be charged.
Only an admin fee or a few hundred dollars can be charged for variable rate loans. Lenders are allowed to charge 'economic costs' for breaking a fixed rate loan. Economic costs can be several thousand dollars depending on the loan size, how long left to run and the diferrence in current rates.
Please talk to us if you are concerned your lender may charge these fees or you wish to challenge the calculation.