What happens at the end of your fixed rate period.
If you have a fixed rate home loan, it’ll automatically switch to a variable rate at the end of the fixed rate period. We’ll let you know in advance so you have time to think about your options.
On This Page
Options at the end of your fixed term
We’ll let you know your fixed term is ending in advance via email or letter.
Potential options
- Roll to a variable rate
A variable rate home loan gives you greater flexibility when managing your mortgage because you can make additional repayments and redraw. Keep in mind interest rates can fluctuate on a variable rate (they can go up or down), so your minimum monthly repayments may change. At the end of your fixed term, your home loan will automatically switch to the standard variable rate, minus the discount outlined in your home loan contract. - Re-fix your home loan
If you’ve enjoyed the stability of knowing your monthly repayment amount and the security that your rate won’t change for an agreed period, you can fix your loan again with a new interest rate and term. - Split your home loan
Consider splitting your loan between variable and fixed rates. This provides certainty of a fixed rate for part of your loan, while offering the flexibility of a variable rate for the other part.
Breaking your fixed rate period early
There may be times when you want to break the fixed rate period early, like if you’re selling your property.
Costs when breaking your fixed rate
If you break your fixed rate period early you may incur a fixed rate break cost and a fixed rate break administration fee, as outlined in your home loan contract and the home loan terms and conditions provided with your loan. It’s important to consider how breaking your fixed rate home loan will affect you financially and to explore your options. To understand more about your options and what your potential costs would be call us on 13 17 19, alternatively message us in the app or online banking.
Ways to avoid a fixed rate break cost
- If you want to pay off your fixed rate loan faster you can make extra repayments of up to $10,000 a year without needing to pay a fixed rate break cost.
- If you need to access extra funds by increasing your home loan you might want to consider applying for a new, separate home loan instead. Our lending criteria will apply.
Common questions
At the end of your fixed term you’ll be sent an Account Position Statement which will include details like your new interest rate and repayment amount.
When you take out a home loan, we typically borrow money from other banks and businesses in the wholesale money market to fund your loan. When you lock in your interest rate with a fixed rate home loan, we also lock in our funding costs at a fixed rate to manage the risk of interest rate changes.
If you break your fixed rate period early, we’re still obligated to repay those in the wholesale money market for the rest of the fixed period. A fixed rate break cost will apply if we’ve made a loss and need to cover it. We don’t profit from charging the fixed rate break cost.
You can find out more about fixed rate break costs in your home loan contract and the home loan terms and conditions provided with your loan.
It depends on a number of factors, including how long you’ve got to go on your fixed rate period and your current loan amount. We also take into account what the rate was in the wholesale money market at the time we borrowed to fund your loan (the ‘funding rate’) and what the rate is when the fixed rate period is terminated early (the ‘investing rate’). The fixed rate break cost covers the difference between these rates.
These wholesale money market interest rates can change substantially from day to day, so any fixed rate break cost quotes you’re given are only valid for that day and subject to change.
Fixed rate break cost calculation example
Let’s say the rate in the wholesale money market when you took out a 5-year fixed rate loan was 5.50% p.a., and now it’s 3.00% p.a.. Now let’s say you decide to break your fixed rate loan with 2 years to go on the fixed rate period, and your current loan principal is $300,000.
To estimate the break cost, the following formula is used:
(Rate when the fixed rate loan was taken out – rate when the fixed rate period ended early) x remaining fixed period of loan x current loan principal = fixed rate break cost.
For the example above, the calculation would be:
(5.50%p.a. – 3.00% p.a.) x 2 x $300,000 = $15,000
This means your estimated fixed rate break cost would be $15,000.
Keep in mind that the exact calculation of the break cost amount also includes additional factors, like the value and timing of the remaining cash flows based on current market interest rates determined by us.
You can also get an estimate of fixed rate break costs by getting in touch with one of our Home Lending Specialists.
You may need to pay these costs if, during your fixed rate period, you:
- Switch or split your loan
This means switching from a fixed to a variable rate home loan, or even to another fixed rate home loan. It also includes splitting your fixed rate loan between fixed and variable. - Increase your loan (also known as a top up)
You might want extra funds and decide to increase the limit of your fixed rate loan. - Pay off some of your loan early
For example, if you ask us to reduce the limit of your fixed rate loan, or if you make extra repayments on your fixed rate loan above the allowed yearly $10,000 maximum. Note that if you do make extra repayments above the maximum, we may refund this money to you – refer to your home loan terms and conditions for more info. - Pay off your whole loan early
For instance, if you sell your property and use the sale proceeds to repay the home loan in full during the fixed rate period.