How to Refinance from Fixed to Variable Rate

Coming Off Your Fixed Rate Period?

If your fixed rate period ending is on the horizon, you're probably starting to think about your options. Many Australian homeowners are finding themselves in this exact position, wondering whether to stay put or make a change. The good news? You're not stuck on high rate repayments if you don't want to be.

When you come off your fixed rate, your lender will typically move you onto their standard variable rate - and that might not be the most favourable option for your situation. This is the perfect time to review your home loan and explore whether refinancing could help you save money and access additional features.

Why Consider Switching to Variable?

A variable interest rate isn't for everyone, but it does offer several advantages worth considering:

• Flexibility: Variable rate loans often come with features like offset accounts and redraw facilities that can help you manage your money more effectively
• Potential to access lower rates: When interest rates drop, so do your repayments
• No fixed rate period constraints: You can make extra repayments without penalties in most cases
• Access to modern features: Many variable rate products include features that weren't available when you first locked in your rate

The refinance process is also an opportunity to potentially access a lower interest rate than what your current lender might offer when your fixed term expires.

Understanding the Refinance Process

Refinancing your home loan doesn't have to be overwhelming. Here's what typically happens:

1. Loan review: We'll look at your current mortgage, including your loan amount, interest rate, and any features you're currently using or missing out on
2. Property valuation: Your property will need to be valued to determine how much equity you've built up
3. Compare refinance rates: We'll explore current refinance rates from various lenders to find options that suit your needs
4. Refinance application: Once you've chosen a product, we'll help you complete the application
5. Settlement: Your new lender pays out your old loan, and you start making repayments at your new rate

The timeline can vary, but most refinance applications are processed within 4-6 weeks.

When to Refinance Your Home Loan

Timing matters when it comes to mortgage refinancing. Here are some situations where refinancing makes sense:

Your fixed rate is about to expire: This is one of the most common triggers. Don't wait until after your fixed rate period ending - start exploring options 3-4 months before

You're paying too much interest: If you've been on the same rate for a while, you might be able to save thousands by switching to a product with a lower interest rate

You want to improve cashflow: A lower rate means lower repayments, which can help with your monthly budget

You need to access equity: Whether you want to access equity for investment purposes, renovations, or to release equity to buy the next property, refinancing can help you unlock equity in your home

You want different features: Maybe you'd benefit from a refinance offset account or redraw facility that your current loan doesn't offer

The Real Cost of Staying Put

Many people stick with their current lender simply because switching seems like too much effort. But staying on a higher rate can cost you significantly over time. Even a difference of 0.5% on a $500,000 loan can mean paying thousands of dollars more each year in interest.

It's worth doing a loan health check to understand exactly where you stand. This review looks at your current situation and helps identify opportunities to reduce loan costs or access features that could work in your favour.

Accessing Equity Through Refinancing

One often-overlooked benefit of refinancing is the ability to access equity in your property. If your home has increased in value since you bought it, you might be able to:

• Access equity for investment in another property
• Complete home renovations
• Consolidate other debts into your mortgage at a lower rate
• Fund other significant expenses

This is sometimes called a cash out refinance, and it can be a smart way to use the wealth you've built up in your property. Just remember that borrowing more will increase your loan amount and potentially your repayments.

Fixed vs Variable: What's Right for You?

Deciding between a fixed interest rate and variable interest rate depends on your personal circumstances. Variable rates offer flexibility and the potential to save when rates drop, while fixed rates provide certainty and protection if rates rise.

Many borrowers choose to split their loan between fixed and variable, getting some benefits of both. There's no one-size-fits-all answer - it depends on your:

• Risk tolerance
• Income stability
• Future plans
• Current financial goals

If you're unsure which option suits your situation, speaking with an experienced mortgage broker can help you weigh up the pros and cons.

Making Your Move

Refinancing to switch from fixed to variable rate can open up opportunities to save money, improve your loan features, and build wealth through your property. Whether your fixed rate expiry is coming up soon or you're already on a variable rate that's not working for you, it's worth exploring what's available in the market.

At Plavin Finance, we work with clients throughout Carnegie and across Australia to help them understand their refinancing options. We'll handle the heavy lifting - from comparing products to managing the refinance application - so you can focus on what matters most to you.

Ready to see what's possible with your home loan? Call one of our team or book an appointment at a time that works for you. Let's have a conversation about your goals and explore whether refinancing could help you get there.