Slashing your debts
Q. You gave some advice in a recent column re fixed-rate mortgage penalties. As far as I know, the standard terms for all the main banks is that you are allowed to repay 5 per cent extra on a fixed rate without penalty, per annum. If you pay more than the 5 per cent, you are then only penalised if the interest rates go down. I understand that in the present market
Monday, April 4th 2005, 8:24AM
by The Landlord
of rates going up, you wouldn’t be charged the penalty.A. Broadly speaking, you’re right.
I did say, two weeks ago, that lenders are likely to let borrowers off the penalty in these days of rising interest rates - because they can then lend out the money again at a higher rate. But the situation is more formalised than when I last inquired.
To get more detail on this, I surveyed the major banks by email. The following responded: ANZ, ASB, BankDirect, BNZ, Kiwibank and National Bank.
All of them, except ASB/BankDirect, generally allow extra repayments of up to 5 per cent a year without penalty, but there are a few complications.
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