Strategies for Transitioning from a Fixed Rate Home Loan to Rising Repayments

One of the key decisions homeowners face is choosing between fixed and variable rate home loans. While fixed-rate loans provide stability and predictability for a predetermined period, they eventually come to an end, often resulting in higher repayments if rates have gone up during your fixed period. As your fixed rate home loan term approaches its expiration date, it's essential to carefully assess your financial situation and consider various factors to ensure a smooth transition. In this article, we will explore some key aspects to consider when your fixed rate home loan is ending, and your repayments are about to increase.


1. Review your financial situation:

Before your fixed rate loan expires, take a comprehensive look at your financial position. Consider factors such as your income stability, current debts, and any potential upcoming expenses. Analysing your financial health will help you determine whether you can comfortably afford the increased repayments or if you need to make adjustments.


2. Consider refinancing options:

As your fixed rate term concludes, you have the opportunity to reassess your loan and explore refinancing options. Research different lenders and loan products to identify potential opportunities for securing a more favourable interest rate or loan terms. Refinancing can help you find a better deal and mitigate the impact of increased repayments.


3. Plan for potential repayment changes:

Before the transition, create a budget that accounts for the potential increase in your loan repayments. Assess your cash flow and make any necessary adjustments to your spending habits to accommodate the changes. By planning ahead, you can reduce financial stress and help ensure a smooth transition.


4. Consider additional loan features:

When refinancing or negotiating with your lender, explore additional loan features that could help you manage your repayments. Some options include offset accounts, redraw facilities, or split loans, which can provide flexibility and potential interest savings. Evaluate these features and assess whether they align with your financial goals and needs. Keep in mind that these features may attract higher fees.


5. Monitor the loan market:

Even after your fixed rate loan term ends, it's important to stay vigilant and monitor the loan market. Interest rates can fluctuate, and new loan products may become available. Regularly reviewing the market can help you identify opportunities to secure a more favourable rate or loan structure in the future.


6. Start paying the new amount in advance:

To ease the financial transition and avoid any surprises, consider starting to pay the increased repayment amount before your fixed rate home loan expires. By doing so, you can gradually adjust your budget and get accustomed to the higher repayments. This proactive approach allows you to gauge the impact on your cash flow and make any necessary adjustments to your spending habits early on. Additionally, paying the increased amount in advance can help you build a buffer and potentially reduce the overall interest paid on your loan. It's worth noting that some lenders may have restrictions on early repayment of fixed rate loans, so it's essential to review your loan terms and discuss this option with your lender.


By implementing this strategy, you can effectively test your budget's resilience and identify areas where you may need to cut back or make additional savings. It also helps you to assess if the higher repayments are sustainable in the long term without causing financial strain.


Need to talk about home loans?

QBANK offers a range of home loan options to suit individual needs, including both variable rate and fixed rate options. Whether you prefer the flexibility of a variable rate or the stability of a fixed rate, get in touch with us today for support tailored to your specific needs.

Submit a Home Loan Enquiry

Talk to a Mobile Banking Specialist


This information is general in nature and does not take into account your objectives, financial situation or needs, therefore, you should consider whether this information is appropriate for your personal circumstances before making a financial decision.