The fixed rate cliff: what happens when your fixed term ends

A fixed rate has a hard end date, and what happens on that date is written into your loan contract: unless you act, the loan rolls automatically onto the lender's revert rate. For many borrowers that means a sudden, sometimes steep, jump in repayments — the so-called fixed rate cliff. The good news is that this is the most predictable event in your loan's life. You know the date months in advance, which means you can plan for it rather than be ambushed by it.

What actually happens when a fixed term ends

On the expiry date, your loan does not pause or require renewal — it simply converts to the variable arrangement specified in your contract, called the revert rate or roll-off rate. Three things typically change at once:

• Your rate becomes the lender's standard variable-style revert rate, which is often higher than both your old fixed rate and the rates the same lender offers new customers
• Your repayment is recalculated on the new rate and your remaining term
• Your loan features may change — fixed loans often restrict extra repayments, offset and redraw, and those restrictions usually fall away once you are variable

Most lenders write to you before expiry, but the letter usually presents their own re-fix offers rather than the whole market. Treat it as a prompt, not a menu.

Why the revert rate is rarely your best deal

Revert rates exist for borrowers who do nothing, and lenders price them accordingly. The gap between a lender's revert rate and the rate it offers a new customer for the same loan can be significant — this is the same new-versus-existing customer dynamic behind the [loyalty tax on home loans](/articles/refinance/loyalty-tax-home-loans). Rolling onto the revert rate and staying there is, in effect, volunteering to pay that tax. Even if you ultimately stay with your lender, you should never simply accept the revert rate without asking for better.

Start your review two to three months before expiry

Timing matters more with fixed expiries than any other refinance trigger, because acting early avoids break costs and acting late means weeks on the revert rate. A sensible timeline:

• Two to three months out: find your exact expiry date on your statement or app. Note your balance, remaining term and estimated LVR — our [LVR and LMI calculator](/calculators/lvr-lmi) helps here. Start comparing what new customers are being offered, both by your lender and others.
• Six to eight weeks out: decide your direction — re-fix, go variable, or refinance. If refinancing, lodge the application now; assessment, valuation and discharge processing take time, and you want settlement to land at or just after expiry so no break costs apply.
• Two to four weeks out: if staying, call your lender, tell them you have compared the market, and ask for their best rate for your loan and LVR. Get the offer in writing.
• Expiry week: confirm what rate and repayment you are actually on. Do not assume — check.

If the cliff has already happened and you are on the revert rate now, nothing is lost except a few weeks of interest. The same steps apply; start today rather than waiting for a better moment.

Option 1: Re-fix with your current lender

Re-fixing suits borrowers who value repayment certainty and are happy with their lender. Before you lock in again, remember what fixing involves:

• Certainty of repayments for the fixed term, which makes budgeting easy
• Restrictions usually return — capped extra repayments, limited or no offset and redraw on the fixed portion
• Break costs apply again if you exit early, so fix only for a period you are confident about
• The re-fix rate on offer is negotiable, particularly if you can show competing offers

A split loan — part fixed, part variable — can give partial certainty while keeping an offset and unlimited extra repayments working on the variable portion.

Option 2: Roll to variable, deliberately

Going variable is not the same as passively accepting the revert rate. A deliberate move to variable means negotiating a competitive variable rate (or refinancing to one) and taking advantage of the flexibility: unlimited extra repayments, full offset and redraw, and no break costs if you later refinance or sell. Variable suits borrowers who want to pay the loan down aggressively or who expect to move, sell or restructure within a couple of years. The trade-off is that your repayments move with the market, in both directions.

Option 3: Refinance to another lender

Fixed expiry is the cleanest refinancing window you will ever get: no break costs, a known date, and maximum leverage. A refinance makes particular sense if your lender will not match the market, if your LVR has improved into a cheaper pricing band, or if your loan's features no longer fit. It is a full application — income, expenses and credit assessed under responsible-lending rules with a buffer of around 3 percentage points above the actual rate — and it comes with modest discharge and government fees. Our [step-by-step refinance guide](/articles/refinance/how-to-refinance) covers the process, and the [refinance page](/loans/refinance) covers what lenders look for.

Preparing your budget for the new repayment

Whatever you choose, your repayment is likely to change at expiry. Work out the new number early using a [repayment calculator](/calculators/repayment) with your balance, remaining term and a realistic post-expiry rate. If the jump is uncomfortable, you have options that are all easier to arrange before you are under pressure: negotiating harder on rate, extending the loan term (which cuts the monthly repayment but increases total interest), or building a buffer in the months before expiry by paying the higher amount early into savings or your offset. If genuine hardship looms, talk to your lender before you miss a repayment — every lender has a hardship team and early contact preserves your options and your credit file.

Talk it through with a broker

A broker can compare your lender's re-fix offer against the wider market, handle the repricing conversation, and time a refinance so it settles at expiry with no break costs. If your fixed term ends in the next few months, [get in touch](/contact) — the earlier the review starts, the more options stay open.