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Break Cost

A break cost is the cost of terminating a contract and is normally associated with repaying a fixed interest rate loan before its term. A break cost is sometimes called a break fee or an early repayment fee. It is best explained as the lenders economic cost for breaking its contract with a borrower. 

The calculations for the economic cost of breaking a fixed rate contract may differ between lenders. The underlying calculations are complex and often lenders will only provide the results of their calculation.

This calculator could help you to decide whether or not it is worth voluntarily incurring a break fee to get a lower interest rate.