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Fixed Rate Ending? What to Do Before It Rolls Over

6 min read · by Ugur, demir.loans

A fixed rate feels like the safe part of your loan, and for the fixed term it is. The risk comes at the end. When the term expires, the loan doesn't stay where it was. It rolls onto the lender's revert rate, and if nobody steps in, it can sit there for years. That's when the loyalty tax hits hardest, because you've gone from a rate the bank had to compete for to one it doesn't.

What happens on expiry day

On the day your fixed term ends, the loan automatically switches to the revert rate set out in your loan contract, usually a variable rate for that product. You don't have to sign anything for this to happen, and your repayments are recalculated on the new rate. Most lenders send a notice in the weeks before expiry, often with an offer to fix again. That offer is a starting point, not necessarily the best rate available to you, and the revert rate itself is rarely the lender's sharpest pricing.

Your options

You can fix again with your current lender, either for the same term or a different one. You can move to their variable rate, ideally a competitive one rather than the default revert rate. You can split the loan, with part fixed and part variable, so you're not betting the whole balance on one direction. Or you can refinance to another lender. Any of these can be the right call. What matters is that it's a decision you make, rather than one the contract makes for you.

Timing a switch without a break cost

While a loan is still inside its fixed term, paying it out early can trigger a break cost. If you're refinancing to another lender, the cleanest approach is to plan settlement for on or just after your expiry date. Check the exact date on your loan documents, not just the month, because settling even a few days early can be enough to trigger a break cost. The timeline is longer than most people expect. Depending on the lender, the discharge alone can take up to 21 business days, which is about a month, and the new lender needs time to assess and approve the application before that. If there's any chance you'll switch lenders, start around two months before expiry. Fixing again or repricing with your current lender is much quicker and can usually be sorted closer to the date.

Locking in a new fixed rate

If you want to fix again with a new lender, the rate you see today may not be the rate you get at settlement. Fixed rates can move while your application is being assessed. Some lenders offer a rate lock, usually for a fee, which holds the quoted fixed rate for a set period until the loan settles. Whether it's worth paying depends on how much fixed rates are moving and how long the gap to settlement is. It's a judgement call, and one worth making deliberately.

If refinancing is harder than you expected

Refinancing to a new lender means being assessed from scratch, including a serviceability buffer on top of the actual rate. If your income has changed, your expenses have grown or rates have risen since you first borrowed, you might not qualify elsewhere as easily as you did the first time. That doesn't leave you stuck on the revert rate. Asking your current lender for a better rate, backed by what the market is offering, doesn't normally involve a full reassessment, and it's often where the quickest win is.

A 60-day plan

60 days out: find your exact expiry date and your revert rate in your loan documents or banking app, and ask your lender what they will offer you.
55 days out: compare that offer with what the market is offering for your situation.
50 days out: decide between fixing again, going variable, splitting or refinancing.
45 days out: if you're refinancing, lodge the application with your documents ready. If you're fixing with a new lender, consider a rate lock.
30 days out: once the new loan is approved, sign the discharge authority with your current lender. Depending on the lender, discharges can take up to 21 business days.
Expiry day: confirm the new rate or the settlement went through, and check the first repayment amount.
Diary note: set a reminder for a review in 12 months, whatever you decide.

Questions, answered

Will my lender automatically give me a good rate when my fixed term ends?

Not automatically. The loan rolls onto the revert rate in your contract. Your lender may offer to fix again or suggest a variable rate, but those offers are worth checking against the market before you accept.

Can I refinance before my fixed rate ends?

You can, but paying out a fixed loan early can trigger a break cost, and it can be significant. In most cases the better approach is to time settlement for on or just after the expiry date. If you're part fixed and part variable, the variable portion can often be dealt with sooner.

Should I fix again or go variable?

It depends on how much certainty you need, how long you plan to hold the loan and whether you want features like an offset account, which some fixed loans limit. A split loan is often a sensible middle ground. I'll walk you through the trade-offs for your numbers rather than give you a rule of thumb.

How early should I start?

About two months before expiry if there's any chance you'll switch lenders. Depending on the lender, the discharge alone can take up to 21 business days, on top of the new lender's assessment. If you're staying with your current lender, fixing again or repricing can usually be sorted much closer to the date.

Talk it through

General information only, so the next step is applying it to your numbers. Book a chat, email ugur@demir.loans or call 0495 000 228. Free, no obligation.

This article is general information only and doesn't take your objectives, financial situation or needs into account. Scheme rules, thresholds and fees change; check current figures before relying on them. No interest rates are quoted on this website.