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What To Do When Your Fixed Rate Expires

Is your fixed rate term coming to an end? Are you planning to refix, switch lenders or sit back and do nothing? Whatever your choice, you’re likely to be overcharged by your bank.

Find out how and what you can do to avoid it.

How the banks overcharge you

Banks can mess with your interest rate in different ways so you may not even realise that you’re paying more than you need to.

They know that few people check their interest rate when their fixed rate period ends! So they take this opportunity to switch you to a higher interest rate:

  • When you refix, you don’t get the special offers the bank gives out to new fixed borrowers.
  • If your loan reverts to a variable rate, you’ll rarely get a good discount.
  • We can complete a pricing request for you or help you to compare other options.

Our mortgage brokers specialise in fixed rate home loans. We know how to make sure the banks don’t overcharge you and what to do when the fixed rate term expires.

You can discuss your situation with one of our mortgage brokers by calling us on 1300 889 743. You can also get a free quote within 24 hours by completing our free online assessment form.

Don’t take what you’re given!

If you sit back and do nothing when your fixed rate term ends, you’ll end up paying whatever the bank charges you.

To put this into perspective, let’s say you just completed a five year fixed rate period on a $500,000 home loan at a 5.05% rate. The loan term is 30 years.

Say the current lowest market rate is 4.34% but your bank charges you 4.84% without providing any other additional benefits.

Although that’s only 0.5% more than competitive interest rates, you’d end up paying up to $39,307 more in the 25 years remaining on the loan term!

This is why you need to make pricing requests and compare deals with other lenders. We can help you with both of these so you don’t get overcharged.

Does a fixed rate meet your needs?

Fixed rates aren’t for everyone. Don’t be dazzled by the seemingly lower interest rates. Don’t fix your home loan if:

  • You’re going to sell your property.
  • You want to make large amounts of extra repayments.
  • You’re planning on refinancing your home loan.
  • You want to renovate or build a new home, in which case you’ll likely have to refinance.

Please refer to our ‘Should I fix guide?’ for more information.

How to extend your fixed rate

After your fixed rate expires, you can choose to refix your home loan. You can extend your fixed rate for another five to ten years.

Generally, the maximum fixed rate term is 10 years. However, after the 10 year fixed rate period is over, you can refix for another 10 years effectively giving yourself a 20 year fixed rate.

You can repeat the process all over again meaning that there is actually no limit to extending your fixed rate!

How to switch to a variable rate

You’ll automatically switch to the Bank Standard Variable Rate (BSVR) once your fixed rate term expires.

If you switch before the end of the fixed rate period then break costs may apply.

Make a pricing request with your bank to make sure that you’re on a competitive interest rate. You may switch lenders if your bank doesn’t offer you a better deal.

Where can you find the best deals?

Simply call us on 1300 889 743 or fill in our free online assessment form and our mortgage brokers will help you find the best deals from our panel of nearly 40 lenders.

Our mortgage brokers have many years of experience in the mortgage industry and, best of all, our services are usually free!

  • Nia

    Which lenders offer the lowest or most competitive interest rates?

  • Hello Nia,

    Banks constantly adjust their fixed rates to match their wholesale funding costs on the money market. Long term rates tend to be more stable than shorter 1 year, 3 year or 5 year fixed rates, which tend to move up and down in response to short term movements in the money market. The number one bank for your fixed rate loan will vary depending on if your loan is a low doc or not, the amount you borrow and if you qualify for a professional package. Call us on 1300 889 743 and we can help you find out which lender is best for your situation.