A fixed rate expiring can feel like a small deadline buried in loan paperwork. When the day arrives, your mortgage repayment may suddenly look different, often less favourable for most borrowers.
If your fixed rate mortgage is coming to the end of its term, it’s wise to review your loan before the expiry date. Taking action early can help you feel more prepared and in control.
Rising repayments catch many Australian homeowners off guard. This guide will walk you through what happens when a fixed rate period ends, how to check your numbers early, and the options available to you.
What Happens When Your Fixed Term Ends
When your fixed rate term finishes, your home loan doesn’t stay at the same rate. It moves automatically to a new rate set by your lender, which can be a surprise if you haven’t checked what’s coming.
Many people call this jump a “rate cliff” because repayments can rise sharply and with little warning.
The Move to a Revert Rate
Once your fixed rate ends, your loan rolls onto what’s called a revert rate. This is usually your lender’s standard variable rate, applied automatically.
Most lenders will send a letter or notice before this happens, but it’s easy to miss. Checking your loan documents or online banking portal is a reliable way to confirm your expiry date.
Why the Standard Variable Rate May Differ From New-Customer Pricing
The standard variable rate (SVR) you move to is often higher than the rate offered to new customers. Lenders tend to offer more competitive rates to attract new borrowers.
This gap can range from half a percent to well over one percent, depending on your lender and market conditions.
How the Rate Cliff Changes Your Repayments
The jump from a fixed rate to a revert rate can raise loan repayments significantly. On larger loan amounts, even a small rate increase adds hundreds of dollars to monthly repayments.
Research from the Reserve Bank has shown that some borrowers coming off fixed terms in recent years faced repayment increases of up to 30 to 50 percent.
Start Your Review Before the Expiry Date
Getting ahead of your fixed rate expiry means knowing the exact date and understanding your new repayment figure. It also means giving yourself enough time to compare refinancing options without feeling rushed.
Confirm Your Expiry Date
Your fixed rate expiry date should be listed in your original loan documents. If you can’t find it there, your lender’s online portal or annual statement will usually show it.
A quick phone call to your lender can also confirm the exact date.
Revert Rate and New Repayment
Once you know your expiry date, ask your lender what revert rate you’ll be moved to. This lets you calculate your new mortgage repayment before it actually changes.
Many lenders offer online calculators for this, or your broker can run the numbers for you.
Test Your Budget Against Higher Repayments
Stress-test your household budget against the higher figure. Consider how a jump in repayments fits alongside your other financial goals and everyday costs.
This is also a good time to check your serviceability buffer and borrowing power, especially if you’re considering refinancing.
Allow Time for a Refinance Application and Settlement
Refinancing typically takes several weeks from application through to settlement. Allow time for a property valuation, paperwork, and settlement fees if you decide to switch lenders.
Starting this process around 90 days before your expiry date gives you enough breathing room to explore your options.
Choose the Right Path for Your Loan
Once you know your numbers, you can choose between staying with your current lender, switching loan types, or refinancing elsewhere. Each path suits different priorities, whether that’s certainty, flexibility, or finding a more competitive rate.
Negotiate With Your Current Lender
It’s worth calling your current lender and asking for a better rate. Lenders often have room to move, especially if you mention a competing offer.
This is usually the quickest option, and it costs nothing to ask.
Re-Fix for Repayment Certainty
If you value knowing exactly what your repayment will be, refixing at a new fixed interest rate might suit you. This works well if your lender’s fixed loan offer is competitive.
Move to a Variable Loan for Flexibility
A variable rate loan allows extra repayments, offset accounts, and redraw facilities that fixed loans often restrict. This suits borrowers who want flexibility.
Use a Split Home Loan to Balance Certainty and Access
A split loan divides your mortgage into fixed and variable portions. It’s a practical middle ground for people who want some repayment certainty alongside some flexibility.
Refinance to a New Lender
Switching lenders can secure a more competitive rate, particularly if your current lender’s revert rate is above the market. A mortgage broker can compare products across multiple lenders to find a better fit.
Compare the Full Cost, Not Just the Headline Rate
The advertised interest rate rarely tells the full story. Discharge fees, application fees, and break costs can add up.
Weigh these costs against loan features like offset accounts and redraw facilities for a clearer picture of value.
Calculate the Repayment Difference Across Each Option
Work out the actual dollar difference in repayments between staying, refixing, or refinancing. Even small percentage differences can add up to real savings or costs over time.
Weigh Fees Against Potential Interest Savings
Discharge fees and application fees can reduce refinancing savings. Compare the comparison rate to see the fuller cost picture, including LVR and LMI considerations where relevant.
Check Features That Support Your Cash Flow
An offset account or redraw facility can reduce the interest you pay over time. Extra repayments give you flexibility and can make a real difference for many households.
Match Your Rate Choice to Your Financial Plans
The best rate choice is the one that matches your financial situation and goals. Some borrowers value certainty, others need flexibility, and market conditions matter too.
When Fixed Rates May Suit Your Priorities
Fixed-rate home loans suit people who want predictable repayments and are budgeting closely. If certainty matters more than flexibility, a fixed rate loan could be the better fit.
When a Variable Rate May Be More Suitable
A variable rate loan suits borrowers wanting to make extra repayments or use an offset account. It also allows you to benefit if rates fall during your loan term.
Questions to Ask Before Restructuring Your Mortgage
Before restructuring, ask yourself what you value most: certainty, flexibility, or lowest overall cost. Speaking with a mortgage broker can help clarify which loan term and structure fits your circumstances.
Understand Rate Movements Without Trying to Predict Them
Interest rates on Australian home loans are influenced by the Reserve Bank of Australia’s cash rate decisions. Lenders don’t always move in lockstep with the RBA.
Understanding the general drivers helps you make calmer decisions, even if timing the market perfectly is difficult.
How the RBA Cash Rate Can Influence Home Loan Rates
The RBA sets the cash rate, which influences the cost of funding for banks. When the cash rate moves, variable rates often shift too, though not always by the same amount or at the same time.
Why Lenders May Change Rates Independently
Lenders can adjust their own rates independently of the RBA, based on funding costs and competitive pressure. This is why two lenders can offer different variable rates even if the cash rate hasn’t changed.
Use a Regular Rate Review After Your Loan Changes
Once your rate changes, whether through refixing, refinancing, or reverting, set a reminder to review it again in a year. Resources like ASIC Moneysmart offer helpful tools for comparing rates and understanding loan costs going forward.
Frequently Asked Questions
What happens when my home loan fixed period ends?
Your loan automatically rolls onto your lender’s standard variable rate, known as the revert rate. This usually happens without you needing to do anything, though it often means a change in your repayment amount.
Will my interest rate increase after the fixed term finishes?
In most cases, yes, since revert rates tend to be higher than the fixed rate you were paying. The exact increase depends on your lender and current market interest rates at the time.
Can I refinance my mortgage before the fixed term ends?
Yes, you can start exploring refinancing options before your fixed rate expires. Just check whether any break costs apply if you switch before the agreed term is up.
Do I need to pay a break cost to leave a fixed-rate loan early?
Break costs typically only apply if you leave before your fixed term naturally ends. Once your fixed rate expires on schedule, you’re free to switch, refix, or refinance without a break fee.
How can I prepare for higher repayments when my fixed rate ends?
Start by confirming your expiry date and calculating what your new revert rate repayment will look like. Testing this figure against your budget early gives you time to explore better options if needed.
Can I fix my home loan again once the current term has finished?
Yes, many lenders allow you to refix your loan for another term once the current one ends.
Comparing current fixed rates against variable options can help you decide if refixing is the right move for you.
