Mortgage discharge fees: what it costs to leave your lender
4 min read · reviewed 2 Nov 2026 · live figures as at 2 Nov 2026
When you close a home loan, several different fees can appear under similar names. Some are banned for newer loans, some are not, and the amounts are set by your lender. This guide separates them so you can ask the right questions.
The fees, in plain terms
| Fee | What it is | What the official sources say |
|---|---|---|
| Discharge (termination) fee | A fee when you close your current loan | Moneysmart lists it among switching costs (page updated 29 October 2026) |
| Exit or early termination fee | A fee if you repay earlier than the stated term | Moneysmart glossary: "a fee which may be applied if a loan is repaid earlier than the stated term" |
| Deferred establishment fee | An exit fee that recovers the lender's set-up costs | Moneysmart glossary defines it as a fee charged when a loan is paid off before a set period has elapsed |
| Break fee | A cost of leaving a fixed rate early | Moneysmart says it may be very high and rises as rates fall |
| Government fees | Registration or release of the mortgage | Check your state's land titles office |
Moneysmart gives no dollar amounts for these, so this guide gives none. The lender's contract and its fee schedule are the source.
The exit fee ban
ASIC's page for Regulatory Guide 220 says the National Credit Regulations "prohibit early termination fees for residential loans, subject to some limited exceptions" and that this has applied since 1 July 2011. The page gives break fees as an example of an early termination fee that the regulations do not prohibit. It does not set out the other exceptions on that page, so read the guide or ask your lender which one it relies on.
ASIC has also published a review of early termination fees on loans entered into before 1 July 2011 (Report 300). If your loan is older than that, check your contract and ask your lender whether an early termination fee applies.
Deferred establishment fees
A deferred establishment fee is charged only if you leave within a set period. If your loan has one, check your contract. Ask the lender which fee name applies to your loan, whether the amount reduces over time, and the exact date it ends. Do not assume a fee is lawful or unlawful from its name. If you think a fee on a post-2011 loan is an exit fee, ask the lender to explain it, and if the answer is unclear you can complain to AFCA (afca.org.au).
Fixed rate break costs
A break fee is a separate cost from a discharge fee. Moneysmart's glossary says generally the more interest rates have come down since you took on the fixed rate loan, the higher the break fee will be. Ask for the figure for a named date. See the real cost of switching for a break-even method, and what happens when your fixed rate expires if the term is nearly over. Lenders currently advertise fixed rates on the fixed rate board.
How to ask for a waiver or an explanation
- Ask for a written list of every closing cost: discharge, any exit or deferred establishment fee, any break fee, and any third-party or government fees passed on.
- Ask what each is for. A fee should reflect a real cost.
- Say you are comparing lenders on live rates and ask whether the lender will waive or reduce a fee, or match a better rate instead. Moneysmart says telling your lender you plan to switch can be quicker and cheaper than refinancing. Use the call script.
- Get the answer in writing, and keep it with your settlement papers.
- If you cannot resolve it, you can complain to the lender and then to AFCA.
Lenders' policies differ and there is no guarantee of a waiver.
Mistakes to avoid
- Comparing only the interest rate and not the closing cost.
- Assuming a fee is banned because it is called an exit fee, when the fee may be a break fee or a discharge fee.
- Forgetting government fees that vary by state and territory.
- Cancelling the old loan before the new lender has confirmed settlement.
Check it on RateSonar
Common questions
Is there still an exit fee on home loans?
For residential loans, ASIC says early termination fees have been prohibited since 1 July 2011, subject to limited exceptions. Older loans, and fees outside the ban such as break fees, can still apply.
What is a discharge fee?
Moneysmart describes it as a fee when you close your current loan. Amounts are set by the lender, so ask for the figure.
Is a break fee the same as an exit fee?
No. A break fee relates to leaving a fixed rate early, and ASIC gives it as an example of an early termination fee the regulations do not prohibit.
Can I get a discharge fee waived?
You can ask. Some lenders may agree, especially if they want to keep your loan, but nothing guarantees it.
Who do I complain to about a fee?
Start with your lender's complaints process. If it is not resolved, you can take it to the Australian Financial Complaints Authority (AFCA).
Sources
- Moneysmart: Switching home loans · page updated 29 October 2026, checked 2 November 2026
- ASIC: RG 220 Early termination fees for residential loans · guide issued 9 November 2023, checked 2 November 2026
- Moneysmart: early termination fee glossary · page updated 24 August 2019, checked 2 November 2026
- Moneysmart: deferred establishment fee glossary · page updated 24 August 2019, checked 2 November 2026
- Moneysmart: break fee glossary · page updated 24 September 2019, checked 2 November 2026