Your Fixed Rate Is Rolling Off — Do You Switch, or Stay Put?

G'day, friends! Bob here. If you fixed your home loan a couple of years back, there's a decent chance the fixed term is about to end — or already has. And when a fixed rate rolls off, your loan doesn't politely ask what you'd like to do next. It quietly flips onto the lender's “revert rate,” which is very often one of the least competitive rates they offer. Blink and you could be paying hundreds more a month without a single letter arriving to warn you properly.

So let's talk about what actually happens, and how to work out — on your own numbers — whether switching lenders is worth the hassle or whether staying put makes more sense.

The “Revert Rate” Ambush

When your fixed period ends, the loan reverts to a standard variable rate set by your lender. Lenders bank on one thing: inertia. Most people are busy, the paperwork looks scary, and “I'll sort it later” turns into two years of overpaying. That gap between the revert rate and the sharpest rate on the market is sometimes called the “loyalty tax” — and loyalty, in this case, is expensive.

The good news? You've got three moves, not one: refinance to a new lender, renegotiate with your current lender (a quick call asking them to match a better rate works more often than you'd think), or do nothing — which is only the right answer if you've actually checked.

The Only Number That Really Matters: Your Break-Even

Switching isn't free, so a lower rate on its own doesn't tell you much. The number that does is your break-even point: how many months of savings it takes to claw back the cost of switching. After that point, the savings are genuinely yours.

It's a simple idea: monthly saving from the lower rate, versus the upfront cost of moving. Here's an illustrative example on a $500,000 loan with 25 years left:

In that example you're ahead after about four months, then pocketing roughly $215 a month — over $2,500 a year — for the rest of the loan. But change the numbers (smaller rate gap, bigger fees, less time left) and the maths can flip. That's the whole point: you have to run your figures, not a headline.

The Costs That Quietly Eat Your Savings

Before you get excited about a shiny low rate, factor in the switching costs. The usual suspects:

• Discharge / release fee from your current lender to close the loan.
• New loan fees — application, settlement, sometimes an annual package fee.
• Valuation fee on the new lender's side (often waived, sometimes not).
• Lenders Mortgage Insurance (LMI) — the big one. If your loan is above roughly 80% of the property's value, you could be charged LMI again when you refinance. That can wipe out years of savings, so it's a genuine dealbreaker to check first.
• Break costs — if you're still inside a fixed term (not rolling off yet), breaking early can be pricey. Rolling off at the end avoids this.

When Staying Put Is the Smart Move

Switching isn't always the winner. Staying — or just renegotiating — can be smarter when the rate gap is small, when your loan-to-value ratio would trigger fresh LMI, when you're planning to sell soon (not enough time to reach break-even), or when your current lender will simply match a better rate with a five-minute phone call. Never underestimate that last one; keeping a customer is cheaper for them than winning a new one.

Bob's 60-Second Switch Check

1. Find your current rate (check your app or last statement — the revert rate may be higher than you think).
2. Get two or three sharper rates from comparison sites or a broker.
3. Add up the switching costs, and check whether refinancing would trigger LMI.
4. Run it through a calculator to see your break-even and total saving.
5. Ring your current lender first and ask them to match. If they do, you've saved money with zero paperwork. If they don't, you've got a real offer in hand.

Cheers,
Bob the Retired Accountant
Proud member of the “always ring and ask them to match” club