Your fixed rate period is ending, and the rate your lender is offering on their standard variable product might be higher than what you locked in two or three years ago.
Refinancing to a different lender's variable rate loan can reduce your interest costs and give you access to features that weren't available while you were fixed. For NDIA employees, this is also the moment to check whether you're still getting the most out of your employment status, particularly if your original loan didn't include public sector benefits like reduced lender's mortgage insurance or preferential pricing.
Why switching from fixed to variable makes sense now
Variable rate loans currently sit below many of the fixed rates that were locked in during recent years. Refinancing to a variable rate product can lower your repayments immediately and give you the flexibility to make extra repayments without penalty, access an offset account to reduce interest on your loan balance, and redraw funds if you need them.
Consider someone working at the NDIA in Geelong who fixed their loan three years ago at 4.8%. Their lender's revert rate is now 6.2%, but a variable rate product from another lender is sitting closer to 6.0% with a full offset account attached. The switch reduces their repayments and gives them access to features that actively reduce the interest they pay each month.
Most fixed rate loans don't allow offset accounts or penalty-free extra repayments. Once your fixed period ends, you can refinance to a product that does, and the difference in how much interest you pay over time can be significant if you're holding spare cash in an offset or regularly putting extra funds toward the loan.
What happens when your fixed rate period ends
When your fixed rate period expires, your loan automatically moves to your lender's standard variable rate unless you actively choose a different product. That standard variable rate is often higher than the variable rates being offered to new customers at other lenders, and it's rarely the most competitive option available.
Your lender should notify you before your fixed period ends, but they're not obligated to offer you their lowest rate. This is when a loan health check becomes useful. You can compare what your current lender is offering against what's available elsewhere, and if there's a lower rate or a product with features that suit your situation, you can refinance before the revert rate kicks in.
If you're an NDIA employee, some lenders will also offer reduced fees or pricing adjustments based on your employer. Those benefits don't always appear automatically, so it's worth confirming that any new loan application includes them.
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The refinance process when moving from fixed to variable
Refinancing from a fixed rate loan to a variable rate product follows the same process as any other home loan refinance, but timing matters. If you apply to refinance before your fixed period ends, you may be charged break costs by your current lender. If you apply after the fixed period expires, those break costs don't apply.
The refinance application itself involves a property valuation, an income and expense assessment, and a credit check. Your new lender will assess your borrowing capacity based on your current income, which for NDIA employees includes your base salary and any regular allowances. If you're planning to access equity as part of the refinance, the valuation will determine how much is available.
Settlement usually takes four to six weeks once your application is approved. During that time, your new lender will arrange for the discharge of your existing loan and the registration of the new mortgage. You'll need to account for discharge fees from your old lender and application or settlement fees from the new one, though many lenders will waive or reduce those fees depending on the loan amount and your circumstances.
Offset accounts and redraw: how they reduce interest costs
An offset account is a transaction account linked to your home loan. The balance in the offset account reduces the amount of interest you're charged each month without requiring you to make extra repayments directly to the loan. If your loan balance is $400,000 and you hold $20,000 in your offset account, you'll only pay interest on $380,000.
Redraw facilities let you access extra repayments you've already made to the loan. If you've paid an additional $10,000 above your minimum repayments, you can withdraw that amount if you need it for renovations, investment, or other expenses. Not all lenders offer unlimited redraws, and some charge fees for accessing those funds, so it's worth confirming the terms before you refinance.
For NDIA employees who receive regular salary increases or performance bonuses, an offset account can be a more flexible way to reduce interest costs than making lump sum repayments. You keep access to the funds while still lowering the interest charged on the loan balance each day.
Accessing equity when you refinance to variable
Refinancing from fixed to variable also gives you the opportunity to access equity in your property if you need funds for an investment property, renovations, or debt consolidation. Equity is the difference between your property's current value and your outstanding loan balance. Lenders will typically allow you to borrow up to 80% of the property's value without paying lender's mortgage insurance, though NDIA employees may have access to higher loan-to-value ratios depending on the lender.
As an example, someone with a property valued at $600,000 and a remaining loan balance of $350,000 has $250,000 in equity. If they refinance and borrow up to 80% of the property value, they could access around $130,000 in additional funds while keeping their total loan balance at $480,000. That equity can be used to fund a deposit on an investment property or consolidate other debts into the mortgage at a lower interest rate.
If you're planning to access equity as part of your refinance, the property valuation becomes particularly important. Lenders will order a valuation as part of the application process, and the amount of equity you can access depends entirely on what that valuation comes back at.
When refinancing from fixed to variable doesn't make sense
Refinancing isn't always the right move. If your current lender's revert rate is competitive and you're already on a loan with an offset account and low fees, switching lenders might cost more in application and settlement fees than you'd save in interest over the next few years.
If you're planning to sell the property within the next 12 months, the cost of refinancing may not be recovered before you exit the loan. Similarly, if your employment or income situation is about to change, it might be worth holding off until your circumstances stabilise, as lenders assess your borrowing capacity based on your current financial position.
For NDIA employees considering a move to a different role or a period of parental leave, it's worth factoring that into the timing of your refinance application. Lenders will want to see stable income, and any upcoming changes can affect how much you're able to borrow or whether the refinance proceeds at all.
What to check before you apply
Before submitting a refinance application, confirm the interest rate, the fees, and the features included in the new loan. Some lenders advertise low headline rates but charge higher ongoing fees or limit access to offset accounts and redraws. Others offer rate discounts that expire after a certain period, leaving you on a higher rate unless you refinance again.
If you're an NDIA employee, check whether the lender offers public sector pricing or reduced lender's mortgage insurance. Not all lenders provide these benefits, and not all brokers will flag them unless you ask. It's also worth checking the discharge fee your current lender will charge when you leave, as that cost needs to be factored into your overall comparison.
You'll also need recent payslips, your most recent mortgage statement, and a current estimate of your property's value. If your property has increased in value since you purchased it, that can improve your borrowing capacity and reduce the interest rate you're offered, particularly if it brings your loan-to-value ratio down below 80%.
Call one of our team or book an appointment at a time that works for you. We'll run through your current loan, compare what's available, and help you decide whether refinancing to a variable rate product makes sense for your situation.
Frequently Asked Questions
When should I refinance from a fixed rate to a variable rate loan?
Refinance when your fixed rate period is about to end and variable rates are lower than your lender's revert rate. You should also consider refinancing if you want access to features like offset accounts or redraw facilities that weren't available on your fixed loan.
Will I be charged break costs if I refinance after my fixed period ends?
No, break costs only apply if you exit a fixed rate loan before the fixed period expires. Once your fixed term ends and your loan moves to a variable rate, you can refinance without penalty.
Can I access equity when I refinance from fixed to variable?
Yes, you can access equity during a refinance if your property has increased in value or you've paid down the loan balance. Lenders typically allow you to borrow up to 80% of the property's current value without paying lender's mortgage insurance.
How long does it take to refinance from a fixed rate to a variable rate loan?
The refinance process usually takes four to six weeks from application to settlement. This includes the property valuation, credit assessment, loan approval, and the discharge and registration of mortgages.
Do NDIA employees get special benefits when refinancing to a variable rate loan?
Yes, some lenders offer reduced fees, lower interest rates, or reduced lender's mortgage insurance for NDIA employees. These benefits aren't always automatic, so it's worth confirming they're included in your loan application.
