What to review before a fixed-rate mortgage expires, including revert rates, equity, repayment changes and refinancing costs.
Start before the fixed period expires
A fixed-rate home loan typically reverts to a lender's nominated variable product when the fixed period ends, unless you choose another arrangement. The new rate and repayment amount can differ meaningfully from your fixed agreement.
Check your expiry date, ask your lender for its expected revert rate and obtain an updated loan balance. Starting early gives you time to compare options without rushing into a new commitment.
Understand your current equity
Your property's value relative to the remaining mortgage affects your loan-to-value ratio. Lenders may require a valuation when you refinance, and a high LVR can restrict options or create insurance costs.
Do not rely solely on an online estimate. A lender valuation may differ from recent sale prices in your neighbourhood.
Compare the whole mortgage package
Consider variable versus fixed pricing, potential redraw or offset needs, package fees and the remaining term. Ask whether your loan allows additional repayments without penalties and what happens if your circumstances change.
A fixed rate may provide payment certainty for an agreed period, but can limit flexibility. A variable rate may offer flexibility while exposing repayments to changes in interest rates.
Build a realistic repayment buffer
Before choosing a new product, compare repayments at the proposed rate and at a higher rate. Think about other household expenses, upcoming life changes and how much emergency savings you want to retain.
If you intend to make additional repayments, review lender rules and how this affects access to your money.
Use a broker to compare scenarios
A refinance mortgage broker can review both staying with your lender and switching to another. Ask for an explanation of fees, the effect of any new loan term and the expected break-even period, so the decision is based on more than one repayment figure.
Useful resources
For general consumer guidance, see ASIC Moneysmart. For tailored home loan assistance, speak with Fulton Financial.
General information only. Loan suitability, features, fees and eligibility depend on your circumstances and lender requirements. Consider obtaining independent legal, tax or financial advice where appropriate.
