What is a Discharge Fee?

Also known as a termination or settlement fee, a discharge fee is paid when you finish paying off the balance on a loan, or refinance with another lender. If you exit early from a loan with a fixed interest rate, you may have to pay an early discharge fee, also known as a break fee, to make up for any scheduled interest payments the lender will miss out on. For home loans, discharge fees cover the lender’s legal costs, and are different from exit fees, which were banned in June 2011.

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