The easiest way to switch from variable to fixed rate

Switching from a variable to a fixed interest rate through a refinance lets you lock in your repayment amount for a set period, giving you clarity over what you'll pay each month.

If you're on a variable rate and concerned about future rate movements, or if you've come off a fixed rate period and want to lock in again rather than stay on the standard variable rate your lender has moved you to, refinancing to a new fixed rate loan can give you that control. The decision comes down to how much certainty matters to you right now, what's available in the market, and whether the structure of a fixed loan suits your plans over the next few years.

Why refinance from variable to fixed rate

You refinance to a fixed rate when you want to remove uncertainty from your repayments. Variable rates move with the market, which can work in your favour when rates fall but also means repayments can climb without warning. A fixed rate gives you the same repayment amount for the term you choose, typically between one and five years.

This makes budgeting straightforward. You know exactly what's leaving your account each month, and you're protected if variable rates continue to rise during your fixed period. For households with tight cashflow or those planning around other commitments like school fees or a second property, that predictability has real value.

Consider a property owner on a variable rate who refinances to a three-year fixed term at current fixed rates. Their repayments stay the same regardless of what happens in the broader economy during that period. If variable rates increase, they're insulated. If rates fall, they're locked in and won't benefit unless they break the fixed term, which usually comes with costs. That trade-off is worth understanding before you commit.

What you give up when you fix your rate

Fixed rate loans typically come with restrictions that variable loans don't. Most lenders limit or remove your ability to make extra repayments beyond a certain threshold, often capping additional payments at around $10,000 to $30,000 per year depending on the lender. If you regularly pay extra off your mortgage or receive irregular income like bonuses or commission, this can feel restrictive.

Access to offset accounts and redraw facilities is also commonly reduced or removed on fixed rate products. If you rely on an offset account to reduce the interest you pay while keeping funds accessible, switching to a fixed loan without that feature changes how your mortgage works. Some lenders offer fixed loans with a partial offset or allow you to split your loan between fixed and variable portions, which can give you some flexibility without losing all the certainty of a fixed rate.

Break costs are another consideration. If you need to exit a fixed rate loan early because you're selling, refinancing again, or paying down a large lump sum, the lender may charge you a break fee. This fee compensates the lender for the difference between the rate you locked in and the rate they can now lend that money at. It can be substantial, particularly if rates have fallen since you fixed. You can read more about how fixed rate expiry works if you're approaching the end of a fixed term and considering your options.

How the refinance process works

Refinancing to switch from variable to fixed follows the same process as any other refinance. You'll submit a refinance application with your chosen lender, provide income and asset documentation, and the lender will conduct a property valuation to confirm your loan-to-value ratio. Settlement typically takes between four and six weeks, depending on the lender and how quickly documents are returned.

Your current lender will calculate a discharge fee, which is usually a few hundred dollars, and you'll also need to cover any government fees related to the mortgage transfer. If you're staying with your existing lender and just switching products, the process is simpler and faster, though it's still worth comparing what other lenders are offering. In our experience, borrowers often assume their current lender will give them the sharpest rate, but that's not always the case.

Once your new fixed rate loan settles, your repayments are locked in for the term you've chosen. You'll receive a new loan contract showing your fixed rate, the end date of the fixed period, and any conditions around extra repayments or features. It's worth noting what rate you'll revert to once the fixed period ends, as this is usually the lender's standard variable rate unless you refinance again or negotiate a new product.

Splitting your loan between fixed and variable

Some borrowers choose to split their loan rather than fixing the entire amount. A common structure is to fix 50% to 70% of the loan and leave the remainder on a variable rate. This gives you certainty over a portion of your repayments while maintaining flexibility on the rest.

The variable portion can be linked to an offset account, allow unlimited extra repayments, and give you access to redraw if needed. The fixed portion provides stability. If rates rise, you're partially protected. If they fall, you still benefit on the variable portion without needing to break the fixed loan. This approach works particularly well for borrowers who want some predictability but don't want to lose all their flexibility.

A split loan does mean you're managing two products, sometimes with different repayment schedules or account structures, so it's worth understanding how your lender administers it before you proceed. Some lenders charge separate fees for each split, while others treat it as a single facility. If you're weighing up whether a split structure suits your situation, a loan health check can help clarify how different split ratios would affect your repayments and access to funds.

When refinancing to fix your rate makes sense

Refinancing from variable to fixed makes sense when you value certainty over flexibility and you're comfortable with the restrictions that come with a fixed rate product. If you're not planning to sell, don't need to make large extra repayments, and want to lock in a rate that you're comfortable paying for the next few years, it's a straightforward decision.

It also makes sense if you're coming off a previous fixed rate and the standard variable rate your lender has moved you to feels high compared to what's available elsewhere. Many borrowers don't realise they can shop around at the end of a fixed term rather than just accepting whatever their lender offers. Refinancing at that point, whether to another fixed term or a more competitive variable rate, is common and often results in lower repayments.

If you're planning to access equity for an investment property or renovation in the near future, fixing your entire loan might not be the right move. Breaking a fixed loan to access equity can trigger break costs, so it's worth either keeping some portion variable or waiting until after you've accessed the equity before locking in a fixed rate.

Call one of our team or book an appointment at a time that works for you if you'd like to talk through whether refinancing to a fixed rate suits your situation and what's currently available.

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