Switching from Fixed to Variable as Your Rate Expires

Your fixed rate period is ending and the revert rate is higher than what you need to pay.

Many midwives locked into fixed rates during the pandemic are now coming off those terms and facing revert rates that sit well above current variable options. The difference can be 0.5% to 1% higher, which on a $500,000 loan translates to roughly $2,500 to $5,000 more in annual interest. For midwives who need to access equity for their next property or want the flexibility of offset accounts and extra repayments, refinancing to a variable rate when your fixed term expires restores control over your loan structure.

How Fixed Rate Expiry Works

When your fixed rate period ends, your loan automatically reverts to your lender's standard variable rate. This revert rate is typically the highest variable rate that lender offers, with none of the discounts that new borrowers receive. You receive a notice around 60 to 90 days before the expiry date, which gives you time to compare what's available and decide whether to stay or move.

Consider a midwife working in a birthing suite who fixed at 2.5% three years ago on a $600,000 loan. That rate expires and reverts to 6.8%, while variable rates with features like offset accounts are available at 6.0% to 6.3%. Even moving to a standard variable rate with the same lender brings that rate down, but refinancing to a different lender often delivers a lower rate along with features that weren't available during the fixed period.

Why Variable Rates Suit Midwives Planning Property Moves

Variable loans allow unlimited extra repayments and full access to offset accounts. If you're planning to expand your property portfolio or release equity to fund an investment deposit, a variable loan gives you the tools to manage cash flow and reduce interest as you build toward that next purchase.

Midwives who work rotating shifts or agency contracts often have irregular income patterns. An offset account linked to a variable rate loan means every dollar sitting in your transaction account reduces the interest charged on your home loan. If you receive a $10,000 agency payment and leave it in offset for two weeks before paying bills, you're effectively earning the loan interest rate on that balance rather than a standard savings rate.

Accessing Equity When You Refinance

Refinancing from fixed to variable also provides the opportunity to access equity if your property has increased in value. Lenders will typically require a property valuation as part of the refinance application, and if the valuation supports it, you can increase your loan amount to release funds for investment deposits, renovations, or other purposes.

As an example, a midwife in Melbourne purchased at $650,000 three years ago and the property is now valued at $780,000. She has paid the loan down to $580,000, giving her around $200,000 in equity. Refinancing to a variable rate loan and borrowing up to 80% of the property value releases approximately $44,000 in cash while avoiding lender's mortgage insurance. That amount can fund a deposit on an investment property without needing to save from scratch.

What Happens During the Refinance Process

You submit a refinance application to a new lender around 90 days before your fixed rate expires. The lender assesses your income, existing debts, and the property value, then provides formal approval within one to two weeks. Settlement typically occurs on or just after the fixed rate expiry date to avoid break costs.

If you refinance before the fixed term ends, you may face break costs calculated on the difference between your fixed rate and current wholesale rates. Waiting until the expiry date eliminates those costs entirely. Your new lender arranges the property valuation, handles the discharge of your old loan, and registers the new mortgage. You continue making repayments to your existing lender until settlement, then switch to the new loan without interruption.

Offset Accounts and Redraw on Variable Loans

Variable rate loans typically offer offset accounts or redraw facilities. An offset account is a transaction account linked to your home loan where the balance reduces the interest charged on your loan. A $20,000 offset balance on a $500,000 loan means you only pay interest on $480,000. Redraw lets you access extra repayments you've made above the minimum, though some lenders restrict how often you can redraw or charge fees.

For midwives who plan to convert their home into an investment property later, an offset account keeps funds separate from the loan, which simplifies tax deductions when the property becomes income-producing. Redraw combines extra payments with the loan balance, which can complicate the deductibility calculation if you later access those funds for personal use.

When Staying on a Fixed Rate Makes Sense

If variable rates are higher than your current fixed rate and you don't need loan features like offset or extra repayments, refinancing to another fixed term can lock in certainty. Some midwives prefer to fix again if they're planning parental leave or a period of reduced hours, as it removes the risk of rate increases during that time.

You can also split your loan between fixed and variable, which gives you some stability while maintaining access to features. A 50/50 split means half your loan has a locked rate and half sits in a variable account with offset and redraw. This approach works well if you want predictability on part of your debt but need flexibility for the rest.

Loan Features That Support Your Next Property Purchase

When you refinance to a variable loan, look for features that align with your property plans. Portable loans let you transfer the mortgage to a new property if you sell and buy within a set timeframe, which avoids refinancing costs when you upgrade. Split loan options let you hold an owner-occupied loan and an investment loan with the same lender, which can reduce paperwork when you access equity for investment.

Some lenders offer interest-only periods on variable loans, which can improve cash flow if you're holding multiple properties. You still have the option to make principal repayments into offset or redraw, but the minimum payment is lower. This structure is common among midwives who purchase an investment property before selling their current home, as it reduces the holding costs during the transition.

Call one of our team or book an appointment at a time that works for you to review your refinance options and confirm which loan structure supports your property goals.

Frequently Asked Questions