Fixed Rate Ending? What to Do When Your Fixed Home Loan Expires

If your fixed-rate home loan period is about to end, you're not alone. Many Australian borrowers face this transition every year, and what you do next could save - or cost - you thousands over the life of your loan.

The good news? You have options. The key is to start planning before your fixed term ends, not after. This guide walks you through exactly what happens, what your choices are, and how to make the best decision for your financial situation.

What Happens When Your Fixed Rate Expires?

When your fixed-rate period ends, your loan doesn't just stop. Instead, your lender will automatically move you onto what's called a revert rate - typically the lender's standard variable rate.

This transition happens automatically. You don't need to sign anything or take any action for it to occur. Your lender is required to notify you before the fixed period ends, but the switch itself is automatic.

Here's what changes:

• Your interest rate changes - from your locked-in fixed rate to the lender's revert rate
• Your repayments change - they'll be recalculated based on the new rate and your remaining loan balance
• Your loan becomes variable - meaning your rate can move up or down with market conditions

The critical thing to understand is that the revert rate is almost never the lender's most competitive variable rate. It's typically a higher, less competitive rate that the lender defaults you onto - which leads us to the next section.

Why the Revert Rate Is Almost Always a Bad Deal

The revert rate exists as a default, not as a competitive offer. Lenders reserve their most competitive rates for new customers or borrowers who actively negotiate.

The ACCC's Residential Mortgage Price Inquiry has highlighted the gap between headline variable rates and the rates existing customers actually pay. Borrowers who take no action when their fixed rate ends often find themselves paying significantly more than they need to.

Think of it this way: the revert rate is the price of inaction. It's what happens when you don't make a choice - and it almost always favours the lender, not you.

To understand how your revert rate compares to what's actually available in the market, tools like RatePilot's home loan comparison can show you the gap between what you're paying and what you could be paying. Right now, some of the most competitive variable rates start from 5.43% p.a., while fixed options are available from 5.49% p.a. for two-year terms and 5.73% p.a. for three-year terms.

Your 4 Options When Your Fixed Rate Ends

You're not stuck with the revert rate. Here are your four main options, each with different trade-offs.

Option 1: Re-Fix with Your Current Lender

You can negotiate a new fixed rate with your existing lender. This is often the simplest option because you avoid the paperwork and settlement process of switching lenders.

Pros:

• Minimal paperwork
• No discharge or settlement fees
• Quick and straightforward
• Rate certainty for another fixed period

Cons:

• Your lender may not offer the most competitive fixed rates
• You miss the opportunity to reassess your entire loan structure
• You're still locked in - early exit will incur break costs

Best for: Borrowers who are happy with their lender's service and whose re-fix rate is genuinely competitive.

Option 2: Negotiate a Variable Rate with Your Current Lender

Instead of refixing, you could stay with your current lender but negotiate a better variable rate than the revert rate. Many lenders will offer a discounted variable rate if you ask - they'd rather keep your business at a lower margin than lose you entirely.

Pros:

• Flexibility to make extra repayments without penalty
• No switching costs
• Access to features like offset accounts and redraw
• Ability to refinance later without break costs

Cons:

• Rate can move up if the RBA raises the cash rate
• May still not be as competitive as rates from other lenders
• Requires you to actively negotiate

Best for: Borrowers who value flexibility and want to keep their options open.

Option 3: Refinance to Another Lender

Refinancing means moving your entire loan to a new lender, usually to secure a more competitive rate and better loan features. This is the most powerful option but involves the most effort.

Pros:

• Access to the most competitive rates in the market
• Opportunity to restructure your loan (term, features, repayment type)
• Some lenders offer cashback incentives to attract refinancers
• Fresh assessment may unlock better terms if your property has grown in value

Cons:

• Involves a full application process (income verification, property valuation)
• May incur discharge fees from your current lender
• Settlement takes time - typically a few weeks
• You'll need to meet the new lender's serviceability criteria

Best for: Borrowers with a strong financial position who want the best possible rate and don't mind the paperwork.

For a step-by-step walkthrough of how refinancing works, see our complete refinancing guide.

Option 4: Split Your Loan

A split loan lets you fix a portion of your loan while keeping the rest on a variable rate. This is a middle-ground strategy that provides some rate certainty while maintaining flexibility.

Pros:

• Partial protection from rate rises on the fixed portion
• Flexibility to make extra repayments on the variable portion
• Diversifies your interest rate risk
• Can be done with your current lender or a new one

Cons:

• More complex to manage
• You'll need to decide on the split ratio
• The fixed portion still carries break cost risk
• May not get the best rate on either portion

Best for: Borrowers who want a balance between certainty and flexibility, or who are unsure about where rates are headed.

For a deeper look at the trade-offs between rate types, read our fixed vs variable rate guide.

When to Start Planning: The 3–6 Month Rule

Don't wait until your fixed rate expires to start thinking about your options. The best time to start planning is three to six months before your fixed period ends.

Here's why:

• Rate locks have expiry dates - if you want to lock in a new rate (whether refixing or refinancing), the rate is typically only held for a limited period
• Refinancing takes time - from application to settlement, the process usually takes several weeks
• You need time to compare - rushing a decision on your biggest financial commitment is never a good idea
• Negotiation leverage - approaching your lender early shows you're an informed borrower who is willing to move

Your Pre-Expiry Checklist

1. Check your expiry date - review your loan documents or call your lender
2. Find out your revert rate - ask your lender what rate you'll roll onto
3. Compare the market - use RatePilot to see what competitive rates look like
4. Check your property value - a higher value may mean a lower LVR, unlocking better rates
5. Review your financial position - income changes, new debts, or changes to expenses can affect your options
6. Talk to your lender - find out what they'll offer to keep your business
7. Get pre-approval from another lender - this strengthens your negotiation position even if you don't switch

Break Costs Explained

If you're considering leaving your fixed rate before it expires, you may face break costs (also called early termination fees). These are important to understand, even though your primary concern may be what happens at the end of the fixed term.

What Are Break Costs?

Break costs are fees charged by your lender if you exit your fixed-rate loan before the fixed period ends. They compensate the lender for the interest they expected to earn over the remaining fixed term.

Key Things to Know

• Break costs only apply during the fixed period, not after it ends
• The calculation is complex and varies by lender - it typically relates to the difference between your locked rate and wholesale market rates at the time of exit
• Break costs can be substantial - they are not a simple flat fee
• They apply whether you're refinancing, selling, or making a large lump sum repayment
• Your lender is required to provide you with an estimate if you ask

Important: If your fixed rate has already ended or is ending imminently, break costs are generally not a concern. They are primarily relevant if you're considering exiting early - for example, to take advantage of lower rates before your term finishes.

For more information on break costs and early exit from fixed loans, see Moneysmart's guide to switching home loans.

How to Compare Your Revert Rate to the Market

Comparing rates effectively requires looking beyond just the headline interest rate. Here's what to consider:

Interest Rate

The most obvious factor. Compare your revert rate to:

• The best variable rates available in the market
• Current fixed rates for various terms
• Your lender's best available rate for new customers

Comparison Rate

The comparison rate includes fees and charges, giving you a more accurate picture of the true cost of a loan. All Australian lenders are required to display comparison rates alongside advertised rates.

Fees

Look at:

• Ongoing fees - annual or monthly fees charged by the lender
• Discharge fees - what your current lender charges to release your mortgage
• Application fees - what a new lender charges to set up your loan
• Valuation fees - costs for property valuation as part of a new application

Features

Make sure you're comparing like with like:

• Offset account availability
• Redraw facility
• Extra repayment flexibility
• Repayment frequency options

The Refinancing Process: A Timeline

If you decide to refinance, here's a typical timeline to expect:

This timeline reinforces why starting the process three to six months before your fixed rate expires gives you the best chance of a smooth transition.

Key Things to Check Before You Switch

Before making your decision, run through this final checklist:

Discharge Fees

Your current lender may charge a fee to release your mortgage. Ask for the exact amount upfront so you can factor it into your comparison.

Settlement Timing

Make sure the settlement date on your new loan aligns with (or comes before) the expiry of your fixed rate. A gap could mean spending time on the expensive revert rate.

Cashback Offers

Some lenders offer cashback incentives to refinancers. While these can be attractive, always look at the rate and total cost over the life of the loan - a slightly lower rate will usually save you more than a one-off cashback.

Serviceability

Lenders assess your ability to repay using the current rate plus a buffer (as required by APRA's lending standards). Changes to your income, expenses, or other debts since you first took out your loan may affect your ability to qualify for a new loan.

Your Loan-to-Value Ratio (LVR)

If your property has increased in value or you've paid down a significant portion of your loan, your LVR may have improved. A lower LVR generally unlocks more competitive rates and avoids the need for Lenders Mortgage Insurance.

The Current Rate Environment

The RBA cash rate is currently 3.85%, with the most recent direction being rise. Understanding the broader rate environment can help inform your decision about whether to fix, go variable, or split - though ultimately, this is a personal decision based on your own risk tolerance and financial circumstances.

For a deeper understanding of how rate movements work and what influences the RBA's decisions, read our interest rate forecast guide.

Making Your Decision

There's no single right answer when your fixed rate expires. The best choice depends on:

• Your financial goals - are you focused on keeping repayments low, paying off your loan faster, or maintaining flexibility?
• Your risk tolerance - are you comfortable with the possibility of rate movements, or do you prefer certainty?
• Your life stage - are you planning to sell, renovate, or stay put for the foreseeable future?
• The market - how does your revert rate compare to what's available?

The one thing that's almost never the right choice is doing nothing. Accepting the revert rate without at least exploring your options leaves money on the table.

Start by comparing home loan rates on RatePilot to see how your current deal stacks up against what's available - and take control of your next move.

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This guide is for general information purposes only and does not constitute financial advice. Consider seeking independent financial advice tailored to your individual circumstances before making decisions about your home loan.