Top 5 ways to switch from variable to fixed rate mortgages

Published 1 May 2026 · Updated 1 May 2026 · 6 min read · By Shane Heness, mortgage broker

Most people ask whether to fix. The more useful question is how, because the route you take changes the cost, the timeframe and what you give up.

1. Fix with your current lender

The simplest route and the one to try first. You call your lender, or we do it for you, and ask to fix all or part of the loan. No new application, no valuation, no conveyancing.

Before accepting the advertised fixed rate, ask for a discount. Lenders discount fixed rates for existing customers more often than people expect, particularly where the alternative is you leaving.

2. Split the loan

Fix a portion and leave the rest variable. This is the route we recommend most often, because it addresses the real problem: fixing removes flexibility, and most households need some.

A common structure is to fix the portion you will not touch and leave variable the amount you expect to offset or pay down. If you hold $80,000 in an offset and expect to add $30,000 over the next two years, leaving roughly $110,000 variable preserves the offset benefit while the rest of the loan gets rate certainty.

Illustrative. Offset availability against fixed portions, and extra repayment caps, vary by lender.

3. Refinance to a new lender and fix at settlement

Where your current lender's fixed rates are not competitive, moving is the answer. You get the new lender's fixed rate, and often a cashback on top.

The trade-off is time and cost. A refinance runs four to six weeks, involves a full application and usually a valuation, and carries a discharge fee of $300 to $400 plus registration fees of a few hundred dollars. Where a cashback is available, those costs are frequently covered.

The timing trap worth knowing: most lenders do not guarantee the fixed rate until settlement unless you pay for a rate lock. If rates move during those four to six weeks, you get the rate on the day.

4. Fix in stages

Rather than fixing everything at one rate on one day, fix a portion now and another portion in six or twelve months, on separate terms.

The logic is the same as not putting an entire investment in on a single day. You end up with an average rather than a bet, and your fixed terms expire at different times, which means you are never re-pricing your whole loan into a single market.

The cost is administrative complexity, and some lenders limit how many splits a loan can have. For larger balances it is usually worth it.

5. Use a rate lock

If you are already mid-application, most lenders offer a rate lock that holds the fixed rate for 60 to 90 days from the lock date, for a fee of around 0.1 to 0.2 per cent of the loan or a flat charge of a few hundred dollars.

Whether it is worth paying depends on which direction you think rates are moving and how much certainty is worth to you. On a $700,000 loan a 0.15 per cent lock fee is around $1,050. If the rate moves up 0.25 per cent in the interim, the lock saved you roughly $1,750 a year for the fixed term. If rates fall, you paid for nothing, although some lenders pass on a lower rate if it drops before settlement. Ask which.

Choosing the term: 1, 2, 3 or 5 years

The term matters as much as the rate, and it is chosen carelessly more often than not. The question is not which term has the sharpest rate today. It is how long you are comfortable being locked in, and what you expect to be doing at the end of it.

One practical note. Lenders do not price terms in a straight line. The three year rate is often lower than the two year rate, and the five year is sometimes lower than both. Ask for the full board rather than assuming a longer lock costs more.

The other consideration is what happens at the end. Every fixed term ends with a reversion to the standard variable rate, which is almost always well above market. Staggering two fixed portions with different expiry dates means you are never re-pricing the whole loan into a single market on a single day.

What you give up by fixing

Every fixed rate conversation should cover these four before the rate itself.

• Offset access. Most lenders do not offer a full offset against a fixed portion. If you hold significant savings, the lost offset benefit can exceed the fixed rate saving.
• Extra repayments. Capped on most fixed loans, commonly $10,000 to $30,000 a year, with break costs beyond that.
• Break costs. If you sell, refinance or repay early, you pay a cost calculated on the lender's funding position. It cannot be estimated reliably in advance and it can run into thousands.
• Reversion. At the end of the fixed term you revert to the lender's standard variable rate, which is almost always well above market. Diarise the expiry date the day you fix.

When fixing is the wrong move

Three situations where we would advise against it.

You might sell within the term. Break costs on a sale are the most avoidable expense in lending. If a move is plausible, stay variable or fix a short term only.

You hold a large offset balance. Run the numbers before fixing. The offset benefit on $150,000 of savings at 6 per cent is roughly $9,000 a year. A 0.3 per cent fixed rate saving on a $700,000 loan is $2,100. Fixing the whole loan would cost you money.

You are about to buy again. Fixed loans are harder to restructure, and an equity release against a fixed portion can trigger a break cost. If another purchase is likely in the next year, keep the flexibility.

What to do the day you fix

Write the expiry date in your calendar with a reminder three months before it. Reversion rates are where the real money is lost, far more than in the choice between fixing and floating. We diarise it for our clients and start the conversation before it happens rather than after.

Our refinancing page covers the costs and the annual review process, or book a free call and we will run the split against your actual offset balance before you decide anything.

Frequently asked questions

Written by Shane Heness

Owner and mortgage broker at LoanBuddy, Parramatta NSW. Eight years as a mortgage broker and a property investor since 2015. Credit Representative #528658 under Australian Credit Licence #389328.