Your fixed rate period is ending.
Your fixed rate period is ending, and the decision you make now could save you thousands or lock you into a loan that no longer suits your needs.
The revert rate your lender has lined up is probably higher than what you locked in a few years ago. You're wondering whether to refinance to a variable rate, fix again, or simply let the loan roll over.
The right move depends on what you need from your loan now, not what made sense when you first fixed. If you need an offset account, want to make extra repayments without restrictions, or you're facing a revert rate that is significantly higher than what's available elsewhere, refinancing to a variable rate may be the most sensible option. Speaking with a Mortgage Broker Canberra homeowners trust can help you compare your options and avoid paying more than necessary.
What Happens When Your Fixed Rate Period Ends
When your fixed rate expires, your loan automatically moves to your lender's standard variable rate. This revert rate is often higher than both the rate you were paying and the rates offered to new customers. You don't need to do anything for this to happen, which is exactly why many borrowers end up paying more than they should.
In Griffith, where many homeowners refinanced or purchased during the low fixed-rate period a few years ago, we're seeing a wave of fixed terms coming to an end. The difference between the old fixed rate and the new revert rate can be substantial, prompting many borrowers to seek advice from a Mortgage Broker Specialist Canberra residents rely on for refinancing guidance.
If you're in this position, you have three main choices: let the loan revert, refinance to another lender, or negotiate with your current lender. The third option may work if your lender is willing to offer a competitive rate to retain your business, but that's not always the case.
Why Refinance to a Variable Rate Instead of Fixing Again
Switching to a variable rate gives you access to features that most fixed loans don't allow. Offset accounts, unlimited extra repayments, and redraw facilities are common features that provide greater flexibility and control.
Consider a borrower in Griffith who fixed at 2.2% three years ago on a loan of around $500,000. The fixed term has ended, and the lender's revert rate is sitting above 6%. A variable rate with another lender may be lower and come with an offset account linked to their savings. A knowledgeable Mortgage Broker Canberra borrowers work with can compare lenders and identify products that better suit their current financial goals.
The other reason to choose variable over fixing again is flexibility. If your income has increased, you may want to make additional repayments without penalty. If you're planning to renovate, invest, or sell in the coming years, a variable loan can offer significantly more freedom.
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Break Costs and When They Apply
If your fixed rate period hasn't ended yet and you're considering refinancing early, you'll likely face break costs. These costs are calculated based on the difference between your fixed rate and current wholesale funding rates.
Break costs are one of the main reasons borrowers wait until their fixed term ends before refinancing. However, if the savings from a lower interest rate outweigh the cost of breaking the loan, refinancing early can still make financial sense. A Mortgage Broker Canberra expert can help you calculate whether the potential savings justify the expense.
Features You Gain by Switching to Variable
Variable loans offer several features that can improve cash flow and give you greater control over your mortgage.
Offset accounts are one of the most valuable tools available. Any funds held in the offset account reduce the balance on which interest is calculated. Over time, this can save thousands in interest and help pay off your loan sooner.
Redraw facilities allow you to access additional repayments you've already made, while unlimited extra repayments provide flexibility to reduce your loan faster whenever your cash flow allows.
For Griffith homeowners, particularly dual-income families and business owners, these features can create meaningful long-term savings. A Mortgage Broker Specialist Canberra homeowners consult regularly can help determine which loan features provide the greatest benefit based on your financial situation.
How the Refinance Process Works
Refinancing to switch from fixed to variable requires a full loan application with a new lender. You'll generally need to provide income verification, details of your expenses, and allow the lender to arrange a property valuation.
Once approved, the new lender pays out the existing loan and registers the new mortgage. The process usually takes between three and six weeks.
Working with an experienced Mortgage Broker Canberra professional can simplify the process by handling lender comparisons, paperwork, and negotiations on your behalf, helping you secure a competitive loan with minimal hassle. For more detail on the refinancing process and what's involved, visit our refinancing page.
When It Makes Sense to Stay on a Fixed Rate
Switching to variable isn't always the right move.
If you prefer certainty in your repayments and aren't concerned about loan features such as offset accounts or extra repayments, fixing again may suit your needs.
Fixed rates can also make sense if you expect interest rates to rise and want protection from future increases. For borrowers on a strict budget, repayment certainty can provide valuable peace of mind.
Before making a decision, it's worth discussing your options with a Mortgage Broker Specialist Canberra borrowers trust to review market conditions, compare products, and ensure your mortgage remains aligned with your financial goals.
