The BreakFee Journal

Think of a fixed-term mortgage like a long-term contract with a gym or a mobile provider. You promised to stay for three years, and in exchange, they gave you a predictable price.

But here's the catch: the bank didn't just "find" that money. They borrowed it from the wholesale market at a specific cost to lend it to you.

Why does the bank care if you leave early?

When you "break" your mortgage early because interest rates have dropped, the bank is suddenly left with a pile of money they expected to earn high interest on. If they can only re-lend that same money at a lower rate now, they lose money.

The Break Fee (or Early Repayment Charge) is simply the bank asking you to cover that loss. It's not a "fine" for being bad; it's a compensation for the profit they're losing because you didn't finish the contract.

"In simple terms: If you break up with the bank when rates are lower than your contract, you're essentially paying for their lost 'future earnings'."

Is it always a bad thing?

Not necessarily. As a developer, I look at this as an Optimization Problem. If the interest you save by switching to a new, lower rate is greater than the break fee you pay today, you win.

The problem is that banks make this math intentionally opaque. That's exactly why I built this tool—to help you see through the "Golden Handcuffs" and decide if it's time to pick the lock.