If you have a fixed rate home loan, there's a date in your future that deserves more attention than most people give it: the day your fixed term ends. On that day, your loan automatically rolls onto what's called a revert rate. Understanding what a revert rate is and why it matters could save you a significant amount of money.
What Is a Revert Rate?
A revert rate is the variable interest rate your loan automatically moves to when your fixed rate period ends. It's set by your lender, and unless you take action before your fixed term expires, you'll be placed on it without any negotiation or comparison.
In most cases, the revert rate is the lender's standard variable rate, which is often not the most competitive rate available, even within that same lender's product range. New customers at the same lender may be offered sharper pricing than existing borrowers who simply roll over.
Why the Revert Rate Is Often Higher Than You'd Expect
Lenders compete hard for new customers. They advertise competitive rates, offer incentives, and price their new loan products attractively. But once you're on the books and your fixed term has ended, the incentive to proactively offer you a better deal is reduced.
The revert rate is often the lender's standard variable rate, which sits above the discounted rates they offer new customers. The gap between the two can be meaningful, sometimes 0.5% to 1% or more, depending on the lender and how long it's been since your loan was last repriced.
What Happens If You Don't Act
If your fixed rate expires and you take no action, the transition is silent. Your repayments change, but most people don't notice for a few months. By the time you realise what rate you're on, you may have already been overpaying for a while.
Lenders are generally required to notify you before your fixed term expires, but the notice doesn't always include a recommendation to shop around. It typically just tells you what your new repayments will be.
What to Do Before Your Fixed Rate Expires
The ideal window to review your options is three to six months before your fixed term ends. That gives you enough time to properly assess alternatives without feeling rushed, and it means you can potentially line up a new rate that starts close to when your fixed term ends.
Your options at expiry are:
- Roll onto the revert rate and stay. Sometimes the revert rate is competitive enough, particularly if your lender has been responsive to repricing requests in the past.
- Ask your lender for a better rate. Your lender's retention team may offer a discount to keep your business. It's always worth asking before assuming you need to switch.
- Refinance to a new lender. If the market has moved significantly or your lender won't budge, switching can access a more competitive rate and potentially better features.
- Fix again for another term. If rate certainty suits your situation, you can lock in a new fixed rate, though the market may have moved since you first fixed.
Find Out What Your Revert Rate Actually Is
If you're currently on a fixed rate, it's worth finding out now what your revert rate will be when your term ends. Log in to your bank's portal or call them directly. Then compare that rate to what's currently available in the market.
At Swish, we regularly help borrowers who are coming off fixed rates understand their options before the revert kicks in. We check your situation, compare the market, and tell you honestly whether staying, asking for a reprice, or switching is the right call.
If your fixed rate is ending in the next six to twelve months, book a free call with Swish and let's look at it before the revert rate quietly takes effect.