Preparing financially
What happens when your fixed rate ends
The 'mortgage cliff' when a fixed term reverts to the standard variable rate, your options beforehand, and when to actually start planning.
- A fixed-rate loan commonly reverts to the lender's standard variable rate when the term ends.
- That reversion rate can be meaningfully higher than what you were paying.
- Existing customers don't always receive a lender's best advertised rate automatically — ask.
- The break cost for ending a fixed loan early doesn't apply once the fixed term has actually ended — only modest discharge/settlement fees remain.
- Starting to compare options two to three months before expiry avoids defaulting onto the standard rate.
The "mortgage cliff"
When a fixed-rate term ends, the loan commonly reverts automatically to the lender's standard variable rate — which can be meaningfully higher than the fixed rate you've been paying, especially if variable rates have risen since you first fixed. This sudden repayment increase is sometimes called a "mortgage cliff", and it arrives whether or not you've planned for it.
Your options before it happens
Do nothing and revert to the standard variable rate; negotiate directly with your current lender for a better ongoing rate (existing customers don't always get the lender's best advertised rate automatically — ask); refinance to a different lender entirely; fix again, either with your current lender or a new one, if a new fixed term suits your plans; or split the loan between a fixed and variable portion — see the comparing home loans guide for how a split works. Each has different costs and trade-offs, and comparing them takes time — which is exactly why planning ahead matters.
One cost worth knowing about doesn't apply here: the break cost that can make ending a fixed loan early expensive only applies while you're still within the fixed term. Once your fixed period has actually ended, switching lenders or loan types no longer carries that penalty — only the usual modest discharge and settlement fees remain, which is part of why comparing your options right at expiry is worth the effort rather than defaulting onto the standard variable rate out of inertia.
When to start planning
Starting to compare options two to three months before your fixed term ends gives enough time to negotiate, apply to refinance if needed, and avoid even a short period on the standard variable rate by default. Mark the expiry date somewhere you'll actually see it well in advance — lenders don't always provide much reminder before the reversion happens.
Practical checklist
Before your fixed rate ends
- Note your fixed-rate expiry date somewhere you'll see it two to three months in advance
- Ask your current lender directly what rate you'll revert to, and whether they'll negotiate
- Compare refinancing, re-fixing and splitting the loan using the comparing home loans guide
- Factor in any costs of switching before deciding
Relevant Delora tool
Questions for a professional
- What rate will I revert to, and can you offer something better as an existing customer?
- What would it cost me to refinance or re-fix instead of reverting?