When a fixed-rate home loan period ends, the loan will generally move to the lender’s applicable variable rate unless another arrangement is agreed. The repayment, features and total cost may change, so review the lender’s notice, new rate, remaining term and alternatives before the expiry date.
The main options can include allowing the loan to revert to variable, negotiating or selecting another fixed period, splitting the loan, refinancing internally or switching lender. The suitable choice depends on cost, flexibility, equity, serviceability and future plans.
What happens when a fixed-rate period ends?
A fixed rate applies for a defined period rather than the entire mortgage term. At expiry, the lender normally applies a variable revert rate and recalculates the required repayment using the outstanding balance and remaining loan term.
The fixed-rate expiry is different from the loan maturity date. You may still have many years left to repay after the fixed period ends.
Why the repayment may change
The new repayment can be affected by:
- the variable or newly fixed interest rate;
- the outstanding balance;
- the years remaining on the mortgage;
- principal-and-interest or interest-only repayment type;
- fees added to or charged on the account;
- any lump-sum repayment; and
- changes to loan structure or features.
Ask the lender for the exact new rate, repayment, effective date and product name. Do not assume the revert rate is the lender’s lowest available variable rate.
Start the review before expiry
Begin early enough to obtain the lender’s notice, compare alternatives and complete any application or valuation. A practical starting window is several weeks to a few months before expiry, but application and settlement timing varies.
Record:
- the fixed-rate expiry date;
- current and proposed rates;
- current and proposed repayments;
- outstanding balance and remaining term;
- offset, redraw and extra-repayment rules;
- annual and package fees;
- any linked accounts or discounts; and
- property value and other debts.
Option 1: allow the loan to revert to variable
A variable rate can provide flexibility, including extra repayments, redraw or an offset account where offered. The rate and repayment can rise or fall.
Before accepting the automatic reversion, compare the rate and fees with other products from the current lender and relevant alternatives. Check whether existing redraw funds, offset accounts and direct debits continue correctly after the change.
Option 2: fix the rate again
Another fixed period can provide repayment certainty for that period. Trade-offs may include:
- not benefiting fully if variable rates fall;
- limits on extra repayments;
- restricted offset or redraw features;
- break costs if the loan is changed or repaid early; and
- another revert rate at the next expiry.
Do not choose a fixed period solely from a forecast about future rates. Consider whether selling, refinancing, receiving a lump sum or changing the property use is reasonably possible during that period.
Option 3: split the loan
A split structure places part of the balance on a fixed rate and part on a variable rate. It may provide some repayment certainty while retaining flexibility on the variable portion.
Check whether each split has separate fees, offset eligibility, repayment arrangements and discharge implications. A split does not remove rate risk or fixed-rate break costs.
Option 4: negotiate or switch products with the current lender
An internal product change may be simpler than moving lender, but it still requires a like-for-like cost comparison. Ask about:
- available rates and eligibility discounts;
- switching or package fees;
- offset and redraw features;
- the comparison rate and ongoing costs;
- whether the remaining term changes; and
- whether a fresh credit assessment is required.
A retention offer is not automatically the lowest total-cost option.
Option 5: refinance to another lender
Refinancing replaces the current loan with a new one. Compare the proposed rate and features against:
- discharge and settlement fees;
- application and valuation costs;
- possible lenders mortgage insurance or low-equity costs;
- cashback conditions;
- break-even time;
- the proposed loan term; and
- total projected interest and fees.
Moneysmart warns that extending the loan back to a longer term can increase total interest. Compare the new loan using a term close to the years remaining unless a longer term is deliberately chosen and understood.
Use the guide to refinancing traps before switching.
Does a break fee apply at the end of the fixed period?
A fixed-rate break cost generally relates to changing or repaying the fixed portion before its expiry. If settlement or product change occurs after expiry, a fixed break cost may not apply, but discharge, switching and other fees can remain.
Timing matters. Ask the lender for a written payout or break-cost quote for the proposed date. The amount can change and should not be estimated from a generic formula.
Using savings or making a lump-sum repayment
Fixed products may limit extra repayments during the fixed period. Expiry can provide an opportunity to consider a lump sum before refixing, subject to lender process and the need for an emergency buffer.
Compare paying down the loan with keeping funds in an eligible offset. Tax treatment can matter if the property is or may become an investment; obtain registered tax advice before redrawing or changing the use of borrowed funds.
Check offset and redraw arrangements
Confirm whether:
- the new product supports a genuine offset;
- the offset applies to the full balance or one split;
- existing redraw remains available;
- account numbers or direct debits change;
- fees outweigh the likely interest saving; and
- access can be limited under the contract.
Offset and redraw can both reduce interest, but they are not identical. Review the current product terms.
Interest-only and fixed periods ending together
If an interest-only period also ends, the repayment may rise because principal must begin to be repaid over the shorter remaining term. Model both changes rather than looking only at the interest rate.
Do not assume a further interest-only period will be approved. The lender will apply current eligibility, serviceability and purpose requirements.
Property valuation and equity
A new lender may order a valuation. A lower accepted value can increase the loan-to-value ratio, reduce refinance options or create mortgage-insurance costs.
Online property estimates and an agent appraisal are not guaranteed lender valuations. See the guide to mortgage valuation methods and shortfalls.
What if the new repayment is unaffordable?
Contact the lender early and ask for its hardship team. Do not wait for missed repayments before explaining the situation. A hardship variation may be available depending on the circumstances.
Free financial counselling is available through the National Debt Helpline. Avoid high-cost short-term borrowing to cover an ongoing mortgage shortfall.
Fixed-rate expiry checklist
- Confirm the expiry date and lender notice.
- Obtain the revert rate and new repayment in writing.
- Check balance, remaining term and repayment type.
- Review fixed, variable, split and internal-switch options.
- Compare external refinancing using total cost.
- Obtain any break-cost or payout quote for the intended date.
- Check valuation, equity and mortgage-insurance implications.
- Review offset, redraw, extra repayments and fees.
- Model rate increases and household cash flow.
- Allow time for approval and settlement without assuming an outcome.
Frequently asked questions
Will my fixed-rate home loan automatically become variable?
Commonly, yes, unless another arrangement is agreed. The lender’s contract and expiry notice set the applicable rate and process.
Can I fix with another lender?
You can apply to refinance to another lender and select an available fixed product, subject to approval, valuation, fees and settlement.
Should I wait until the fixed period ends to refinance?
Compare the benefit of earlier action with the lender’s current break-cost quote and other switching costs. There is no universal answer.
Can I make a large repayment before fixing again?
Possibly. Coordinate timing with the lender so the payment is applied correctly and does not trigger an avoidable fixed-period limit.
Does refixing require a new application?
The current lender may offer a rate-selection process or require reassessment. A different lender will require a new application and credit assessment.
Official guidance and next steps
- Moneysmart: fixed, variable and split home loans
- Moneysmart: switching home loans and break-even costs
- Moneysmart: mortgage switching calculator
- National Debt Helpline
- Discuss a fixed-rate expiry review with GQ Finance
This article provides general information only and does not take into account your objectives, financial situation or needs. Rates, revert products, repayments, break costs, fees, valuation, serviceability, product features and approval conditions vary. Review the credit contract and obtain independent legal, tax or financial advice where appropriate. GQ Finance Pty Ltd ABN 19 827 707 218. Australian Credit Representative No. 523333.
