Breakage costs and breakage gains

Whether a breakage cost or breakage gain applies depends on whether interest rates have fallen or risen since you entered into the fixed interest rate agreement.

Breakage costs and breakage gains reflect whether the Housing Bank loses or gains interest income when you repay your debt more quickly than agreed or terminate a fixed interest rate agreement before the end of the fixed-rate period.

Breakage costs

If the fixed interest rate you are paying is higher than the fixed interest rate currently offered to new customers, the Housing Bank loses interest income when you make an additional repayment or repay the loan early. In this case, you must pay the difference.

If you incur a breakage cost, you may be entitled to tax relief, provided the amount is reported in your tax return. Breakage costs are treated in the same way as interest paid on debt.

Breakage gains

If the fixed interest rate you are paying is lower than the fixed interest rate currently offered to new customers, the Housing Bank gains interest income when you make an additional repayment or repay the loan before the fixed-rate period expires. This gain is credited towards repayment of your loan.

Breakage gains are reported to the Norwegian Tax Administration as taxable interest income.

How we calculate breakage costs and breakage gains

Breakage costs and breakage gains are calculated by comparing your interest rate with a weighted average of the two fixed-rate offers closest to your remaining fixed-rate period.

Examples

• If you terminate the agreement with two years remaining of the fixed-rate period, we use a weighted average of the floating interest rate and the three-year fixed-rate offer.
• If you terminate the agreement with seven years remaining of the fixed-rate period, we use a weighted average of the five-year and ten-year fixed-rate offers.

Breakage costs and breakage gains are calculated in accordance with Section 2-1 of the Financial Agreements Regulations.