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When taking out a home loan, choosing whether to opt for a fixed or a variable rate is a decision that many borrowers think long and hard about. For those people who took out a fixed rate loan at the end of 2020 or during 2021, the recent increases of interest rates won’t have impacted their monthly repayments, but their fixed term period could soon be coming to an end.

So, what happens when your term does end? And with rates predicted to rise even further this year, how can you prepare for your new rate, now?

When a fixed rate term comes to an end

Your term ending is the perfect time to reassess your needs and financial situation. Once you’ve done that, you have three options: re-fix, refinance, or revert.

Fix your loan again

Your lender will notify you a month or two before your fixed term ends and offer to discuss the options you have and what suits you best moving forward. If you’re happy with the rate and features offered, then there isn’t much left for you to do but agree to another fixed term.

Refinance your loan

When it comes to refinancing your home loan, you can stick with the same lender or bank and switch the loan you have, or you can move to another bank or lender. Doing this may get you a better rate as a new customer, but make sure you ask about upfront and ongoing fees or charges to pay, so you don’t end up paying even more each month. One easy way to do this is to look at the comparison rate – this is the effective rate you’ll be paying once the fees and charges are taken into consideration.

Remember that if you’re leaving your current lender, you will be charged exit fees.


If you don’t do anything when the term of your fixed rate home loan is up, the interest rate will revert to a ‘standard’ variable rate set by the lender or bank. This rate is often higher than the rate you’ve been fixed on and will increase your monthly repayments.

In the following example, this ‘revert’ would increase the amount to be repaid each month on a $500,000 loan by $620:

Fixed Rate Loan Variable Rate loan
Interest rate   1.99% Interest rate   4.27%
Monthly repayment $1,846 Monthly repayment $2,466

For P&N Bank customers, the revert rate is based on the current Variable Home Loan rate. With interest rates rising as a result of the increasing Cash Rate (set by the RBA), the monthly repayment increase could be even larger if your fixed term loan is set to expire at the end of this year, or early next, after your lender’s ‘standard’ rate has risen.

How can I prepare for an increase?

If you’re currently enjoying a low fixed rate, the above information may worry you, especially with everyday expenses like fuel and groceries increasing – but thankfully, you have time to get ready.

One great place to start it to review your current spending and create a budget. That way you’ll see what money you have available and know if you’ll be able to afford the increase in repayments that you may face in the future.

Sticking to a budget will also allow you to save some extra cash. We all know that savings are important and having some funds available for emergencies or when your circumstances change can be a game-changer for your future self. Saving extra now, could make life less stressful in the coming months. 

Need more help?

The cash rate, inflation and interest rates can be confusing – and stress inducing – but we’re here to help. If you would like to talk to someone about your home loan and get ready for future changes, you can call us on 13 25 77. Alternatively, book an appointment to speak with a specialist in branch, online or over the phone. If you have a broker, they'll also be able to assist you.


Banking and Credit products issued by Police & Nurses Limited (P&N Bank) ABN 69 087 651 876 AFSL/Australian Credit Licence 240701. Any advice does not take into account your objectives, financial situation or needs. Read the relevant T&Cs, before downloading apps or acquiring any product, in considering and deciding whether it is right for you. The Target Market Determinations (TMDs) are available here or upon request.