Fixed Rate Expiry Strategy: What to Do Before Your Rate Ends

When your fixed rate ends, your loan will usually move to your lender’s variable revert rate unless you act first. A good expiry strategy has four steps. Find out what the revert rate will be, work out what it does to your repayments, compare your options (roll to variable, refix, split, or refinance), and decide with enough lead time to switch if that is the better deal. This guide walks through each step for Australian borrowers, with a worked example you can adapt.

TL;DR

• At expiry your loan typically rolls to the lender’s variable revert rate, which can be higher than the fixed rate you had, so repayments may jump.
• Your options are to roll to variable, refix, split the loan, or refinance to another lender. Each trades certainty against flexibility.
• Start the conversation at least three months out, and compare rates and fees together, not the headline rate alone.
• Stress-test your budget with repayments about 3% higher before you commit to anything.
• If you cannot afford the new repayments, call your lender early and ask about hardship options.

Table of Contents

• What actually happens when your fixed rate ends
• Build your timeline: 3 months out to expiry day
• Your four options at expiry
• Worked example: what a higher rate does to your budget
• Prepare your finances before the date
• If you cannot afford the new repayments
• Perspective: treat expiry as a planning event, not a rate bet
• Model your options before you decide
• Common mistakes at fixed rate expiry
• FAQ
• Sources

What actually happens when your fixed rate ends

MoneySmart, the government’s consumer money site, explains that at the end of the fixed period the loan will usually move to the lender’s variable revert rate unless you switch home loans or agree to another fixed period. A variable rate can rise or fall, so your repayments change with it.

Lenders handle the mechanics in similar ways. ANZ says the loan rolls to variable automatically unless you choose another arrangement. It also says the repayment schedule adjusts on its own, but if you make your own regular payments you must make sure they meet the new minimum. Bankwest says it gives advance notice, and your statement shows the new rate and repayment amount.

The catch is the revert rate itself. BCU warns that the standard variable revert rate may be higher than your previous fixed rate, and the letter you receive should state the rate and product that will apply. NAB adds that the variable rate it offers can depend on whether the property is owner-occupied or an investment. If you hold an investment property, check that detail specifically.

One more point from Westpac: lenders generally do not extend the existing fixed term. After expiry they give you a new fixed-rate offer priced on current funding markets, which change daily. So “keeping my old rate” is not an option on the table. The real choice is between the new rates.

Build your timeline: 3 months out to expiry day

The Australian Banking Association recommends you start talking to your bank at least three months before expiry. That lead time matters because a refinance involves an application, a valuation and settlement, and none of it happens overnight. Lenders also move on their own schedules. Westpac says it contacts customers six to eight weeks before expiry, and NAB says it sends a reminder letter about a month before with the new rate. If you wait for the letter, you may have only weeks to act.

A workable sequence looks like this:

1. Three to four months out: Find your exact expiry date (your loan documents, internet banking or app will show it). Note your balance, remaining term, repayment type, and any offset or redraw balance.
2. About three months out: Ask your lender what revert rate will apply and what your repayment will become. Ask what refix rates they offer, and whether any fees apply if you change products.
3. Two to three months out: Compare the market. Include the interest rate and every fee for each alternative, as the Banking Association advises.
4. One to two months out: Run your budget at the new repayment, plus a buffer. Decide, and lodge any application with time to spare.
5. Expiry week: Confirm the new rate and repayment have been applied, and that your automatic payment covers the new minimum.

Note what the timeline does not require: a perfect forecast of interest rates. Nobody has one. The goal is to arrive at expiry with a decision made on numbers, not to be a default.

Your four options at expiry

Westpac lists the core choices as re-fixing, rolling onto a variable rate, or splitting the loan, and says to weigh your circumstances, goals and market trends. The fourth path, refinancing to a different lender, is the one that takes most preparation.

Roll to variable

This is the default if you do nothing. ANZ says variable loans can provide redraw, an eligible offset account and additional repayments without the restrictions that come with a fixed loan, while the rate stays changeable. Bankwest makes a similar point about flexibility for extra repayments and redraw.

Rolling over is not automatically a bad outcome. But it is the option most likely to be priced at your lender’s standard revert rate, so you should know that number before you accept it by inaction.

Refix

MoneySmart notes that fixed repayments do not change during the fixed period, which makes budgeting easier, but you do not benefit if market rates fall. Fixed loans may also have fewer features, such as offset accounts or unrestricted extra repayments. ANZ says its refix terms run from one to five, seven or ten years, subject to agreement, fees and conditions, and that refixing is not guaranteed. Terms differ by lender, so ask yours.

The other cost of refixing is a future one. Break fees may apply if you switch, sell or pay off a fixed loan early, which MoneySmart warns about directly. Before you refix for a long term, ask yourself whether you might sell, refinance or receive a lump sum (a bonus, an inheritance, a sale) within that term.

Split the loan

Bankwest describes splitting as combining repayment certainty on part of the balance with variable flexibility on the rest. It is a hedge, not a prediction. If rates rise, the fixed portion cushions you. If they fall, the variable portion benefits. A common approach is to keep the variable slice large enough to hold your offset balance or absorb extra repayments, and fix the rest.

Refinance

If the revert rate looks poor, switching lenders may beat both rolling over and refixing with your current one. Your fixed term is ending, so the break fees that apply to leaving early generally are not in play once you reach expiry. MoneySmart still advises asking about fees or charges that could apply if you leave before the fixed period finishes, so check the exact date. When you compare, include application, discharge and ongoing fees, not just the rate. The Banking Association says to weigh both the interest rate and all fees.

A practical tip: before you apply elsewhere, ask your current lender what rate it would give you to stay. The answer costs nothing and gives you a benchmark.

Worked example: what a higher rate does to your budget

Here is a simple illustration, using our own arithmetic, not a quote from any lender. Say you owe $500,000 with 25 years left on a principal-and-interest loan.

That is roughly $850 a month, or about $10,200 a year, from the same loan balance. Your own numbers will differ, and the point is to run them before expiry day. MoneySmart suggests using its mortgage calculator to check whether your budget can handle repayments rising by about 3%, and to compare repayments and total loan cost at different rates.

Two questions follow from the example:

• Do you have a buffer? If a repayment increase would consume your spare cash, build a cushion now. Directing the difference into an offset or savings account in the months before expiry doubles as a test run.
• What does it do to the bigger plan? Higher repayments crowd out other goals: super contributions, an investment property deposit, or a retirement date. That is where the loan decision stops being only a mortgage question.

Prepare your finances before the date

Lenders and brokers tend to give the same preparation advice, and it holds up:

• Reduce the balance if you can. A lower balance relative to your property value tends to help in a refinance, and cuts the interest you pay either way.
• Check your budget at the new repayment. NAB recommends a repayment calculator to estimate the new payments and budget ahead.
• Know your offset position. If you want an offset on the other side of expiry, see how much it would save. Our guide to offset versus redraw shows how the two differ in practice, and the piece on offset accounts for investment properties covers the investor angle.
• Gather documents early. If you plan to refinance, payslips, statements and your loan details take time to collect.

For investors, one more check applies. The revert rate and available products can differ for investment loans, as NAB notes, so compare like with like.

If you cannot afford the new repayments

Do not wait and hope. The Banking Association advises contacting your lender as soon as possible and being open about your financial position. Depending on your circumstances, options may include using redraw or savings, or discussing changes to the loan arrangement. The right solution depends on your case, but early, candid contact improves the chance of finding something workable.

If you are close to or in retirement, this matters even more, because your income may be fixed while your repayments are not. Our piece on carrying a mortgage into retirement models three paths and what each does to your income.

Perspective: treat expiry as a planning event, not a rate bet

Most fixed-rate advice online turns into a guess about where rates go next. We think that is the wrong frame. You can’t control the cash rate, but you can control whether your plan survives a range of outcomes.

The question we would ask is this: if repayments rise by a few percent, what happens to your retirement age, your retirement income and your net worth? A mortgage is not isolated. It competes for the same dollars as your super contributions, your ETFs and any investment property. Looking at the repayment alone hides those trade-offs.

That is why we built AeroWealth around side-by-side scenarios and stress tests. Model “roll to variable”, “refix” and “split” as separate scenarios, run each at a higher rate than you expect, and compare what they do to the whole plan. The best expiry decision is often the one that leaves you with the least regret across scenarios, not the one with the lowest rate today.

— Aerowealth Team

Model your options before you decide

If you want to see how each option changes your repayments, offset savings and retirement outlook together, you can build it in AeroWealth. The free plan lets you start, and Pro is $7 per month (AUD) with expanded scenario planning and advanced mortgage features. See AeroWealth plans and pricing to compare them.

Common mistakes at fixed rate expiry

• Doing nothing by accident. Silence means the roll to variable. That might be fine, but it should be a choice.
• Comparing only headline rates. Fees, features and the offset can outweigh a small rate gap. The offset account versus savings account comparison shows how much a feature can be worth.
• Refixing too long. A long term gives certainty, but can lock you out of extra repayments and cost you if plans change.
• Leaving it too late. Starting a refinance in the last weeks leaves little room for delays.
• Ignoring your wider plan. A repayment that is affordable today may still slow your super or retirement timing.

FAQ

What happens when a fixed rate expires?

Your loan usually rolls to the lender’s variable revert rate unless you refix or switch. Repayments are recalculated, and the rate can then move up or down. Your lender’s notice should state the new rate and repayment.

How early should I act before my fixed rate ends?

The Australian Banking Association recommends starting discussions with your bank at least three months before expiry. That gives you time to compare options and, if needed, complete a refinance. Lenders often send their own notices only six to eight weeks, or about a month, ahead.

Is it better to refix or go variable?

It depends on your budget and plans. Refixing gives repayment certainty but fewer features and potential break fees if you leave early. Variable gives flexibility such as extra repayments, redraw and an offset, but repayments can rise. A split loan sits between the two.

What if I can’t afford the higher repayments?

Contact your lender as soon as you can and explain your position honestly. Ask about hardship options and whether redraw, savings or a change to the loan could help. Early contact improves your chance of a workable solution.

Sources

• Fixed vs variable home loan interest rates, MoneySmart
• Changes to your home loan repayments, ANZ
• What happens at the end of a fixed rate period, Bankwest
• What should I do if my fixed rate loan period is expiring, BCU
• How to prepare for the end of a home loan’s fixed rate, NAB
• What should I do when my fixed home loan term ends, Westpac
• Home Loans, Australian Banking Association

Recommended

• Offset vs Redraw: Which One Actually Saves You More?
• Interest Only vs Principal and Interest: Which Fits You?