Judo Business Lending Pricing

For further information please contact your Director Relationships.

Early Repayment Costs

At Judo, we fund our customer’s fixed rate loans based on an expected loan term, repayment frequency and repayment amount. If you choose to repay your fixed rate loan early, an Early Repayment Cost may arise. An early repayment cost is our reasonable estimate of the difference between what we would have earned had you not repaid all or part of your fixed rate loan, and what we can earn from re-lending the pre-paid amount.

Why do Early Repayment Costs arise?

To determine if Judo has incurred any loss as a result of an early repayment, we look at the differential in the wholesale interest rate between the day the fixed rate loan was entered into, and the date of early repayment. This is because Judo’s funding costs are largely determined by wholesale interest rates. If the wholesale interest rate on the day of early repayment is less than the wholesale interest rate at the start of the fixed interest rate period, a loss will be incurred by Judo. This loss arises as Judo needs to re-lend the pre-paid amount to a different customer, all the while continuing to pay interest at the relatively higher interest rate. This cost is an estimation as we manage our funding on a portfolio basis.

What will determine the amount?

Early Repayment Costs are determined by several factors, including:

1. The amount of the loan being repaid early
2. The remaining fixed interest rate period of the loan
3. Your contracted loan repayments
4. The difference in the wholesale interest rate between the day the fixed rate was entered in to, and the day of the early repayment. The Early Repayment Cost calculation can be provided on request. Should you be considering repaying your fixed interest rate loan early, please contact us.

An Example:

• A Judo customer borrows $500,000 in an interest only facility at a rate of 5.45%, fixed for 5 years. Repayments are to be made monthly. Judo's underlying wholesale interest rate for this deal was 2.95%.

• After one year, the customer would like to repay their loan in full. The prevailing interest rate for a 4 year fixed rate is 4.5%, and Judo's wholesale interest rate for the same period is now 2.00%.

• Based on this, the wholesale interest rate has decreased by 0.95% indicating that the market value of this money has decreased. Judo will look to re-lend this repaid money to another customer, however it will have to do so at a relatively higher cost so that Judo does not break its own funding position.

• Judo calculates its early repayment amount using the following formula: Early Repayment Cost = Principal remaining * Wholesale Interest rate differential (per period) ^ Number of remaining repayments

• Using the values from the above example, $500,000 * (0.95%/12) ^ 48 = $19,357.80 total for the remaining four years.

Default Rate margin

The current Default Rate margin is 4.00% per annum.

Loan variation fee - Equipment Loan

Loan Variation Fee means, in the event that we agree to vary an equipment loan, the fee payable by the Borrower as disclosed in the Equipment Loan Schedule.

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