Lock-In Period
- Your lock-in period is the mother of all constraints; the cost of breaking the lock-in is typically be 1.5% of your entire loan.
- Some packages allow you to reprice within lock in periods.
- On that note, when exiting the property, it is the only acceptable time to pay for thereafter rates, for the sole purpose of avoiding this penalty.
How to avoid lock-in penalties?
Timing your exit
If you can time your exit to be on the day of the rate change, that would be best.
Make sure your selling agent is aware of the date and complete on the day of the rate review date.
Doing so can help you avoid penalties and thereafter rates.
Waiver of Penalty on Sale
To avoid the lock-in period penalty, without paying thereafter rates,
Make sure to be able to get a clause within your mortgage, which gives you a waiver of fees due to sale.
This is not available for most banks so you'd need to know where to go, before selling off your property
Pay thereafter rates
Thereafter rates are usually cost significantly more than the rates offered when repricing or refinancing.
This happens to be the only way to avoid the lock-in penalty when it comes to selling your property for most banks.
Time your sale towards the end of your lock in period, and try to complete the property transaction to align with the end of your lock in.
Clawback Periods
If you have previously refinanced, your current bank would have extended subsidies to cover legal and valuation charges. Your clawback period is typically 3 years, which means, even if your loan is out of the lock-in period, you may still be subjected to the clawback period.
How to avoid clawback?
Reprice your mortgage
Most mortgage packages come with a free repricing, which allows you to change your rates with your existing bank.
The rates may not be the best, but it may make sense for you to reprice so that you'd be avoiding the clawback when you're selling off the property.
If you may be interested in repricing, check out our repricing page.
Notice Period
When you're selling your property, the banks consider this a full redemption of your loan.
Keep in mind, when you're selling off your property you'd need to adhere to their notice period.
Notice periods are typically 2-3months for full redemption, while you're at it, check if your bank has a rate review date.
How to avoid notice related penalties?
Know your timeline
Before selling off your property, make sure you're aware of the notice period and rate review dates imposed on you by your bank.
Time your completion by reading your letter of offer and calling up your bank.
How can we help?
Avoid Fees
Avoid unnecessary fees and penalties for your property sale
Right Connections
We will connect you to lawfirms or selling agents if you need them.
Budget for Re-entry
We can help work out the budget for your next property.