Why does ING DIRECT charge break costs?
Break costs are not a fee set by ING DIRECT. When we agree to finance a fixed rate loan, we borrow funds from the market for the term requested by you. The funds are then provided to you at the interest rate and term as agreed and outlined in your letter of offer. In cases where a loan is repaid early, the interest from the fixed rate loan stops but the Banks borrowing expenses continue for the remaining term of the loan. The calculation of this amount is based on the difference between the original cost incurred by the bank to borrow the funds and the cost incurred by the bank to repay the funds borrowed. ING DIRECT does not make a profit from charging break costs. These costs simply represent the loss incurred.
