Refinance After Fixed Rate Ends
When your fixed rate expires, review your current loan terms, compare the reversionary variable rate against the market, and negotiate or refinance to avoid higher repayments.
What should I do when my fixed rate expires?
When your fixed home loan rate expires, your account automatically rolls over onto your lender's standard variable rate. This default reversion rate is often substantially higher than the discounted variable rates available to new borrowers, resulting in a sudden increase in your required monthly repayments.
Before the fixed term ends, review your remaining loan balance against your property's current estimated value to determine your loan-to-value ratio (LVR). Maintaining an LVR below 80 per cent helps you avoid Lenders Mortgage Insurance (LMI) while unlocking access to the lowest interest rate tiers across Australian banks.
You can choose to negotiate a discount with your current provider, re-fix all or part of your balance, or refinance with a new lender altogether. Because existing lenders rarely pass on their best pricing automatically, assessing alternative lenders using the comparison rate is crucial to avoiding an unnecessary interest penalty.
A Lonix broker can compare lenders across the market and structure your loan to better fit your ongoing cash flow. They assess your serviceability, manage the refinancing paperwork, and negotiate on your behalf to secure a rate tailored to your situation.
Related questions
- How far in advance should I start preparing before my fixed rate ends?
- You should start reviewing your options two to three months before your fixed term expires. This gives you sufficient time to gather financial documents, compare lenders, and complete a refinance before rolling onto a higher variable rate.
- Will I be charged break costs if I refinance after my fixed rate expires?
- No, break costs only apply if you exit or alter a fixed-rate loan before the fixed period officially finishes. Once your term expires, you can switch lenders or loan structures without paying early break fees.
- What is a loan reversion rate?
- A reversion rate is the default variable interest rate your home loan automatically switches to when a fixed rate period ends. It is usually higher than the discounted rates advertised to new customers, making a rate review essential.
- Can I split my home loan after my fixed rate finishes?
- Yes, when your fixed term ends, you can choose to split your loan balance between fixed and variable options. This allows you to maintain rate certainty on one portion while utilizing features like an offset account on the variable portion.