When a fixed rate period ends, your loan doesn't stop. It moves onto whatever rate your loan contract sets for the next period, and for many loans that's the lender's variable rate. If you do nothing, that's the rate you'll pay.
Moneysmart's example of a couple coming off a fixed rate is blunt: when the fixed period ends, their rate goes up. Thirty days is enough time to check your options, as long as you start now. Here's a checklist.
30 days out: get the facts
- Find your expiry date. It's in your loan contract and usually on your lender's app or statements.
- Find out what rate applies next. Check your loan contract and any letter from your lender. If it isn't clear, call and ask.
- Note your balance and repayment. You'll want to compare like for like.
- Estimate your property's value. Your equity affects your options, including whether lenders mortgage insurance (LMI) applies if you switch.
25 days out: ask your current lender
Ring your lender and ask what it can offer to keep you. Moneysmart notes that your lender may reduce the rate on your current loan to keep your business. Having at least 20% equity and a good credit score helps.
Get any offer in writing. Ask whether moving to a different product with the same lender carries a switching fee.
20 days out: gather your documents
- Your two most recent payslips, or recent tax returns if you're self-employed
- Your latest home loan statements
- Statements for any other debts and credit cards
- A rough list of your monthly living costs
If your income has changed since you took out the loan, for example a new roster, a move to site or a change in overtime, tell us now. It changes which lenders may suit.
15 days out: compare the full cost
A lower rate only helps if it outweighs the costs of switching. Moneysmart lists the costs to look at:
- Break fee: if you leave a fixed rate before it ends, you may need to pay one.
- Discharge fee: charged by your current lender when you close the loan.
- Application or establishment fee: charged by some new lenders.
- Switching fee: if you move to a different product with the same lender.
- LMI: if you have less than 20% equity, it can increase the cost of switching and outweigh the savings.
Moneysmart also suggests keeping the loan term similar. Stretching the term back out lowers your repayment but means more interest overall.
Then think about the structure. Do you want to fix again, go variable, or split the loan? Do you use an offset account or make extra repayments? Fixed loans often limit these features, so check what each option allows.
10 days out: decide and apply
If a new lender suits better, apply now. Be realistic about timing. A refinance can take a few weeks from application to settlement, and it can take longer if a valuation or extra documents are needed.
If the new loan settles a little after your fixed period ends, you'll usually sit on the revert rate for a short time. That's often cheaper than leaving early, because settling before the fixed period ends can trigger a break fee. Ask your current lender how any break cost would be worked out before you set a settlement date.
Settlement week: tidy up
- Sign and return the discharge authority your current lender needs.
- Set up your new repayments and offset account, if you have one.
- Move any regular payments linked to your old account.
- Check your first statement on the new loan to make sure the balance and rate match what you agreed.
If you decide to stay
Staying put can be the right call, especially if your lender's offer is competitive or switching costs are high. You've still done the work: you know what's on offer, and you've asked for a better deal instead of accepting the revert rate by default.
Our refinance page explains how we compare options. If you're an investor coming off a fixed rate, our investment loans page covers what changes, and your accountant can advise on any tax questions.
Talk it through
Send us your fixed rate expiry date and latest statement and we'll compare your lender's offer against what else may suit. Call or text 0458 773 002, or book a free assessment. For most home loans there's no broker fee; any fee is disclosed upfront in our Credit Guide.
Common questions
What happens when my fixed rate ends?
Your loan moves onto the rate your loan contract sets for the next period, which for many loans is the lender's variable rate. Check your contract or ask your lender what that rate will be.
Will I pay a break fee if I refinance when my fixed rate ends?
Generally a break fee is a risk when you leave a fixed rate before it ends. Timing settlement for on or after the expiry date can help you avoid one, but check with your lender how any break cost would be worked out.
How long does a refinance take?
Often a few weeks from application to settlement, and longer if a valuation or more documents are needed. Starting 30 days out gives you room.
Should I just ask my current lender for a better rate?
It's worth doing first. Moneysmart notes lenders may reduce your rate to keep your business, and having an offer in writing helps you compare.
Sources
This guide is general information only and doesn't take into account your objectives, financial situation or needs. Talk to us about your circumstances before acting on it. Related: Refinancing.