What should I do when my fixed home loan term ends?
Review your situation before choosing to re-fix, switch to variable or split your home loan.
April 2023 – 8 minute read
What you'll learn
1. What happens when my fixed rate term ends?
2. What’s the difference between fixed and variable?
3. When should I fix my home loan interest rate?
4. What happens if interest rates drop during my fixed rate term?
5. How do I re-fix my home loan?
6. How do I split my home loan?
1. What happens when my fixed rate term ends?
When your fixed rate interest term expires, you'll have three options: re-fix, automatically roll onto a variable interest rate, or split your home loan. Before deciding, factors to consider are, your circumstances, future financial goals, and current market trends as they could have changed. You can calculate your repayments with our rate change calculator. Some lenders offer fixed rate terms from 1 to 5 years and, depending on the period you select, will guarantee the interest rate you'll pay for that term. You’d have chosen a fixed rate term when you initially locked in your interest rate, so your lender will only get back in touch with a new offer close to expiry. If you’re with Westpac, we’ll be in touch 6-8 weeks before expiry detailing your new repayments and options.
To make the offer less complicated, your lender will typically provide you with the opportunity to re-fix or detail the variable interest rate if you want to switch.
In most cases, switching to a variable interest rate will happen automatically after your fixed rate expires, so it will likely not require you to respond. But, before you make any decisions, it's always wise to review your home loan to ensure your loan meets your needs now and into the future. With Westpac, you’ll automatically roll onto our standard variable home loan with an optional offset account.
Why should I review my home loan?
Whenever there’s a change in circumstances, whether personal, market conditions or to do with your home loan set up, it's time to review your loan, especially when your mortgage is coming off a fixed rate period. You should be planning ahead at least 3 months before expiry, as this will give you the time to arrange any changes in the last few weeks.
What do I need to do to review my home loan?
To review a home loan, you might like to take into consideration:
- Is there a change in your financial situation? A new job or loss of income?
- Are you expanding your family, or thinking of downsizing?
- Will you plan to sell your home or use your equity to renovate or buy an investment property?
NOTE: This is not a complete list of factors. You should seek independent financial advice specific to your objectives and needs.
Need help with your home loan?
If you’re a Westpac customer, get in touch with us up to 6 to 8 weeks before expiry if you’d like us to review your Westpac rate and options, or to re-fix over the phone up to 2 weeks before expiry.
Can I extend my fixed rate period?
No. Once your fixed rate term's expired, your lender will provide you with a new fixed rate offer. Lenders don’t extend fixed rate terms as the wholesale money market – where your lender borrows the money for your fixed rate term – changes daily. So when your fixed term's expired, the wholesale interest rate could be significantly different.
2. What’s the difference between fixed and variable?
The main difference between a fixed and variable home loan is that the interest rate's guaranteed with a fixed rate loan. In contrast, the interest rate could go up or down depending on the economy with a variable loan.
A fixed rate loan generally gives you more certainty, while a variable loan could provide more flexibility.
- Lock in a rate for a set term for added certainty
- Easier to budget as minimum repayments stay the same over the fixed term
- Make and redraw^ extra repayments to a set limit during the fixed term. At Westpac, that limit's $30,000
- Avoid break costs** when buying and selling using your loan’s portability feature.
Considerations: Break costs** may be charged if you end your fixed term early, make changes to your loan or exceed the prepayment threshold. An offset account isn't available on a fixed rate loan.
To take advantage of the benefits of both home loan types, you could opt to split your home loan by fixing a portion of your loan and leaving the remainder at a variable rate.
How do I know which is better – fixed or variable?
One is not necessarily better than the other. It all depends on your current situation and future plans. The best idea is to weigh up all the pros and cons. By comparing home loans, you can work out if you want more flexibility with your loan or if you want more certainty. Our handy home loan calculators can also help look at your borrowing capabilities, especially if you're looking to increase your mortgage, discover what equity you might have in your home, and calculate your potential repayments.
Talk to your lender about your home loan options
Speak to your lender to find out the latest home loans and the features and services you can expect to be made available. New offers, options, or a home loan package# could help you save on interest and pay off your home loan sooner.
Let's talk home loans
Call 8am-8pm, Mon – Fri, and 9am-6pm Sat and Sun: 132 558 or you can request a callback.
3. When should I fix my home loan interest rate?
If your home loan is now on a fixed term, and you’d like to re-fix it as soon as the term expires, either wait for your lender's offer or reach out to them.
At Westpac, we'll send you a letter with your options in the lead-up to your fixed term ending. You can opt to accept the new fixed rate offer online, which will automatically come into effect when the previous term expires. If you don’t want to re-fix, your loan will automatically roll over to a variable rate loan when your fixed term expires.
Do you have a Westpac home loan with a fixed rate term due to expire soon? Review your options and check your home loan account for a new offer from 6-8 weeks beforehand.
You can fix your variable interest rate any time, if your mortgage isn’t currently fixed. Whether you should lock in a rate will depend on your circumstances.
If your Westpac fixed term’s already ended, you can fix all or part of your home loan in three easy steps.
When’s it a good idea to lock in your interest rate?
No one can predict the future, so you can’t know what will happen to interest rates in one, two or five years. But, it could be a good idea if your circumstances mean you’d prefer to know your repayments for up to 5 years, and you want to lock in a rate.
Lock in your interest rate if you think rates will rise soon and if you’d like the certainty of knowing what your minimum repayments will be.
Want to know more about re-fixing or fixing a variable rate?
Westpac customers can check out their fixed expiry options – or get help by calling 8am-8pm, Mon-Fri and 9am-6pm, Sat-Sun (Sydney time): 132 558 or, booking a callback.
4. What happens if interest rates drop during my fixed rate term?
If interest rates drop (or rise, for that matter) during your fixed rate period, it won't affect your repayments as you've locked in your home loan rate for an agreed term, up to 5 years. Locking in your rate has its benefits, especially if rates rise, but also it means you'll know for the fixed period precisely what your minmum repayments will be. The only negative is, of course, if interest rates decrease. If this happens soon after you’ve fixed your loan, you’ll need to ride it out, as breaking your fixed rate period could cost you more in break fees** than the benefits you’d gain from a lower rate.
Should I break my fixed rate term to lock in a new rate?
It's not a good idea to break a fixed rate period in most cases. The reason is break costs** may apply, and they can be very costly, especially if you still have over half of your fixed term to go. But, suppose you have a year or less until your fixed term expires, and you want to break your term to close your loan, make changes to your loan, move to a variable rate or lock in another fixed term to shield yourself from possible rate rises. You'd possibly look to break a fixed period in each of these scenarios, though you need to be careful as break costs can be expensive. Before you decide, you should request a break cost quote to determine if it’s worth paying break fees.
Ask for a break cost quote
Westpac customers can request a quote by calling 8am-8pm, Mon-Fri and 9am-6pm, Sat-Sun (Sydney time): 132 558, or booking a callback.
What are break costs and when do they apply?
A break cost ** is a fee charged when a fixed interest rate term's terminated before it's expired.
There are two main reasons you may be charged a break cost:
If you make extra repayments into your loan account above the prepayment threshold during the fixed period
If you make a change to your home loan during the fixed term. Includes: switching to another lender or product, changing interest rate, or changing your repayment type.
What’s the prepayment threshold?
It’s the amount your lender has specified that you can make in extra payments into your home loan account over a fixed rate period without incurring break costs**. At Westpac, the prepayment threshold for a fixed rate home loan is $30,000 during the fixed term.
5. How do I re-fix my home loan?
Every lender will have a method for you to follow. In most cases, they'll send you a pre-expiry letter telling you that your repayments are changing, and how to re-fix before your current fixed rate term ends.
When can I compare my rate options?
If you’re with Westpac you can view your fixed expiry interest rate options in the Westpac App and Online Banking, up to 6-8 weeks before expiry. And here’s how to re-fix with us:
- Select your home loan. Select Account details, then the View options link. Choose your new fixed term of up to 5 years. To secure the displayed rate, select the Fixed Rate Lock-in option1 (otherwise we’ll apply the rate two business days before the end of the fixed term). Hit confirm.
- Prefer to re-fix over the phone? Book a callback up to two weeks before your fixed term ends.
How can I fix my home loan, if my previous fixed term's already expired?
If your fixed rate has rolled onto a variable rate, most lenders will let you fix your rate again. Remember, before fixing your entire loan you’ll need to consider what you’d like to do with any redraw funds available in your variable home loan account, and any funds you may have in a linked offset account. At Westpac, you can fix any portion of your variable loan in three easy steps – read on to find out how.
6. How do I split my home loan?
Once your fixed rate rolls onto a variable rate loan, you can generally choose to fix your entire loan balance, or a portion (split).
At Westpac, you can do this anytime in three easy steps online, or by booking a callback:
Things you should know
Conditions, credit criteria, fees and charges apply. Based on Westpac's credit criteria, residential lending is not available for Non-Australian Resident borrowers.
This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice.
#Premier Advantage Package: Conditions of Use and $395 annual package fee applies. You must either hold or be approved for a Westpac Choice transaction account in order to qualify and continue to receive the benefits of the Premier Advantage Package. Applicants must have a Westpac Choice transaction account linked to the home loan at the time of settlement and must keep this account open for 60 days after settlement. Before deciding to acquire a Westpac Choice account, read the terms and conditions, and consider whether the product is right for you. Tax consequences may arise from this promotion for investors and customers should seek independent advice on any taxation matters.
Premier Advantage Package Conditions of Use (PDF 200KB)
Repayment holiday: Conditions, eligibility and suitability criteria apply.
- Reduced loan repayments: reduction of up to 50% available for up to 6 months on variable home loans held with us for over 12 months. It is important to understand that at the end of the reduced repayment period, the repayment amount will increase to adjust for the reduced repayments. This ensures that the loan is still repaid within its original term. Read the disclosure documents for your selected product or service before deciding if this option is right for you.
- Mortgage repayment pause: available for up to 6 months on variable home loans held with us for over 12 months.
- Parental leave: if your existing variable home loan has had at least 12 months of Principle & Interest repayments, you could be eligible to reduce your home loan repayments up to 50% for up to 12 months while on maternity or paternity leave, subject to approval.
^Redraw facility: if you have ‘available funds’ (you’ve made extra home loan repayments) and you’ve activated your redraw facility, you’re free to redraw them with no redraw fee. Up to $100k will be available to redraw from your variable loan online or over the phone each day (unlimited in-branch). For fixed loans you can redraw up to your prepayment threshold during your fixed term. Read our Home Loan Redraw Authority form (PDF 66KB) for full details.
**Break costs on fixed loan prepayments and switching: customers can make total prepayments of up to $30,000 (cumulative) for fixed loans, without costs or fees applying. You may incur a break cost and administration fee if your prepayments exceed this threshold, or if at any time before the end of a fixed rate period you switch to another product, interest rate (fixed or variable) or repayment type.
+LVR stands for the loan-to-value ratio. LVR is the amount of your loan compared to the Bank’s valuation of your property offered to secure your loan expressed as a percentage. Home loan rates for new loans are set based on the initial LVR and won’t change during the life of the loan as the LVR changes.
1Rate Lock: We’ll apply the fixed rate available on the loan settlement date or the date your fixed rate term starts, unless you lock a fixed rate on your loan using our Rate Lock feature. The fixed rate lock-in fee is 0.10% of your loan amount. At the end of the fixed rate term, the interest rate will roll onto our standard variable home loan interest rate, unless a new fixed rate term’s selected and then the fixed rate is determined two business days before the end of the fixed term.