What happens to your repayments when a fixed rate ends.

If you fixed your home loan two or three years ago, there is a date circled on a calendar somewhere that you are either watching approach or have already passed. That is the day your fixed rate ends, and it is the day your lender moves you onto whatever comes next.

For most people, what comes next is not a choice. It is a rate the lender assigns, called the revert rate, and it is rarely the one you would have picked if you had been asked. The gap between the rate you were on and the rate you land on can be significant, and it takes effect automatically.

What the revert rate actually is

When a fixed period ends, your loan does not stay fixed. It rolls onto a variable rate set by the lender, and that rate is usually their standard variable rate or something close to it. That is not their most competitive rate. It is the default, the one that exists for people who do not do anything about it.

The lender writes to you before it happens. They tell you the date, they tell you the new rate, and they may include a comparison or an invitation to call. What they usually do not do is call you themselves, and they do not shop the market for you. The letter arrives, the date passes, and the new rate is in effect.

The practical result is that a lot of people end up on a rate that is higher than what they could be on, simply because the switch was automatic and doing nothing was the path of least resistance.

When to start the conversation

The right time to start is well before the fixed period ends, not after. The reason is options. Three months out, you can look at fixing again, moving to a different variable rate, splitting the loan, or refinancing to another lender entirely. Two weeks out, most of those options narrow, and once the rate has already rolled, you are reacting rather than choosing.

I usually suggest starting the conversation three months before the fixed period ends. That gives enough time to look at what your current lender is offering, compare it with what else is available, work out whether refinancing is worth the costs involved, and make a decision without a deadline breathing down your neck.

If you are already past the date and sitting on the revert rate, that is not a disaster. It is just a more expensive starting point, and the same conversation still helps. The difference is that every month on the revert rate is money you did not need to spend.

Fixing again, or going variable

Once the fixed period is ending, the obvious question is whether to fix again or go variable. There is no universal right answer, and anyone who tells you there is without looking at your situation is guessing. The right call depends heavily on market conditions at the time, and those change. If you want a sense of where the market is sitting right now, I have written about what the current fall in mortgage demand actually means for buyers.

Fixing again gives you certainty. You know what the repayments are for the next period, and you can plan around them. The trade-off is that you are locked in, and if rates move down you do not benefit. There may also be break costs if you need to get out of the fixed period early, which is worth understanding before you commit.

Going variable gives you flexibility. You can make extra repayments, use an offset account, and you benefit if rates move down. The trade-off is that rates can also move up, and your repayments change with them.

One thing worth knowing is that fixed rates are less reactive to your loan to value ratio than variable rates. If you are in a high LVR scenario, where you have less than 20 percent equity, a fixed rate can sometimes be the better option for a period because the lender is not pricing the risk as aggressively as they would on a variable product. It is not always the case, but it is a factor that rarely gets mentioned and sometimes tips the decision.

Whether refinancing is worth it

Refinancing to a different lender is a separate question from fixing or going variable with your current one. It involves discharge fees from your existing lender, application fees with the new one, and potentially a fresh valuation. Whether it is worth it depends on the rate difference, the size of the loan, and how long you plan to stay in the property.

Sometimes the honest answer is that your current lender has a competitive offer and the cost of moving is not justified. Other times the difference is large enough that refinancing pays for itself within months. I will not move you for the sake of it, and I will tell you if staying put is the better call.

If you want to look at this in more detail, I have a separate page on refinancing that covers coming off a fixed rate, high LVR refinancing, loyalty pricing, and restructuring after a change in circumstances.

What I would suggest

If your fixed rate is ending in the next few months, give me a call. Ten minutes is enough to look at what you are on now, what your lender is likely to revert you to, and whether there is something worth doing about it before the date arrives.

If it has already rolled and you are on the revert rate, the same conversation still helps. The difference is that you are already paying more than you need to, and the sooner we look at it the less of that adds up.