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Property & Mortgages
What happens when my fixed rate home loan expires in Australia?
When your fixed rate period ends, your loan automatically rolls onto your lender's standard variable rate — which is typically higher than both your old fixed rate and the best variable rates on the market. You don't have to stay on it. You can re-fix, negotiate, or refinance, but you need to act: doing nothing is usually the most expensive choice.
What exactly happens on expiry day?
On the date your fixed rate period ends — often 1, 2, 3, or 5 years after your loan started — your lender automatically switches your loan to their revert rate. This is also called the standard variable rate (SVR).
Lenders set their revert rate well above their sharpest advertised rates. They rely on the fact that many borrowers don't act quickly — or at all. The difference between a lender's revert rate and their best variable product can easily be 0.5% to 1.5% per annum, which on a $600,000 loan represents $3,000–$9,000 a year in extra interest.
What are my options when the fixed rate ends?
| Option | What it means | Best for |
|---|---|---|
| Revert to variable | Do nothing — loan switches to lender's SVR automatically | Nobody. The SVR is almost always uncompetitive. |
| Negotiate a better variable rate | Call your lender and ask for a discount or switch to their sharpest variable product | Borrowers with a good repayment history who want flexibility |
| Re-fix with same lender | Lock in a new fixed rate for another term | Those who want payment certainty and prefer not to change lenders |
| Refinance to another lender | Switch your entire loan to a new lender with better rate or features | Borrowers with sufficient equity, good credit, and time to go through the process |
| Split loan | Fix part of the balance, leave the rest on variable | Those who want some certainty but also want to make extra repayments |
Should I re-fix or go variable?
This depends on the interest rate environment at the time your fixed period ends — which nobody can predict with certainty. The general considerations:
- Re-fixing gives you repayment certainty. If rates rise further, you're protected. But if rates fall, you're locked in at a higher rate and face break costs if you want to exit early. You also can't typically make large extra repayments on a fixed loan.
- Going variable gives you flexibility — extra repayments, offset accounts, and the ability to switch or refinance without break costs. If rates fall, your repayments fall. If rates rise, they rise.
- Splitting gives you a middle ground: fix a portion for certainty and leave the rest variable for flexibility.
A licensed mortgage broker can model different scenarios against your loan balance and financial goals. You can also use ASIC's MoneySmart mortgage calculator to estimate costs across different rate scenarios.
What are break costs, and do they apply at expiry?
Break costs (also called early repayment fees or economic costs) apply if you exit a fixed rate loan before the fixed period ends. They compensate the lender for the interest they lose when wholesale rates have fallen since you locked in.
Break costs do not apply when your fixed period naturally expires. The transition to variable at expiry is not an early exit — so no break costs apply for simply rolling off your fixed rate. Fees only become relevant if you refinance (discharge fees apply) or choose to re-fix and later exit early again.
How early should I start reviewing my options?
Start the process 3 to 6 months before your fixed rate expires. Here's why:
- Refinancing takes 4–8 weeks from application to settlement on average
- Some lenders will lock in a new fixed rate from application date, so starting early can get you into a better rate before expiry
- You need time to gather documents (tax returns, payslips, statements) and compare options without being rushed
- If your lender contacts you first (they often do, 30–60 days before expiry), their offer may not be their best — get independent comparisons
What is the serviceability buffer and does it affect refinancing?
When you refinance, lenders must assess whether you can afford the loan at a rate 3 percentage points above the loan's interest rate — this is APRA's minimum serviceability buffer.
If you've had a significant income change or property values have fallen (affecting your equity), refinancing may be harder than when you first took out the loan. A broker can identify lenders likely to approve your application.
What costs are involved in refinancing?
- Discharge fee from your current lender: typically $150 – $400
- Application or establishment fee at the new lender: $0 – $700 (many lenders waive this)
- Valuation fee: $0 – $600 (often waived or covered by the new lender)
- LMI: if your equity has dropped below 20%, switching lenders may trigger LMI again
- Government fees: mortgage registration/transfer fees set by your state
Many lenders offer refinance cashback deals that can offset these costs, though cashback amounts and conditions vary and should be weighed against the ongoing interest rate.
Want to understand what your options actually look like?
Fixed rate expiry is one of the most important financial moments in a homeowner's life — the numbers matter and they're different for everyone. That's what we're building Zyloz for: helping you see your full financial picture and connecting you with a licensed mortgage broker when you're ready to act.
