Variable rates move with the market, and that movement can chip away at your household budget over time. Refinancing from a variable rate to a fixed rate lets you lock in your repayments for a set period, giving you predictable costs and protection from rate rises.
Why Refinance from Variable to Fixed Rate
Switching to a fixed rate through a refinance home loan makes sense when you want to protect yourself from further rate increases or when you need certainty for budgeting. If rates have been climbing and you expect them to stay elevated, locking in now can prevent your repayments from rising further. For households in Leederville where cost of living pressures are already high, a fixed rate removes one source of financial uncertainty.
Consider a homeowner in Leederville with a $550,000 loan on a variable rate. Over the past two years, their repayments have increased multiple times as their lender passed on rate rises. They refinance to a three-year fixed rate, locking in their current repayment amount. Even if variable rates rise again during that period, their repayments stay the same. That certainty lets them plan ahead without worrying about budget shocks.
How the Refinance Process Works
Refinancing to switch from variable to fixed involves submitting a new loan application, either with your current lender or a different one. The lender will assess your income, expenses, and property value to confirm you meet their lending criteria. If you stay with the same lender, the process is often quicker because they already hold your loan details. If you move to a new lender, you may access a lower fixed rate or different loan features, but you will need to provide full documentation again.
You will also need a property valuation, which the lender usually arranges. If your property value has increased since you first borrowed, you may have more equity available, which can improve your loan-to-value ratio and open up additional rate options. For properties near Oxford Street or around Lake Monger, valuations have generally held firm, meaning many Leederville homeowners refinancing today are in a solid equity position.
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Fixed Rate Terms and What They Mean for You
Fixed rates are typically available for terms ranging from one to five years. A shorter fixed term, such as one or two years, suits you if you expect rates to drop in the near future and want to return to a variable rate sooner. A longer fixed term, such as four or five years, gives you extended protection if you believe rates will stay high or continue rising. The trade-off is flexibility. Once you lock in, you cannot make extra repayments beyond a small annual limit without incurring break costs, and you lose access to features like offset accounts or redraws in most cases.
In our experience, many Leederville residents who work in the Perth CBD or nearby precincts prefer three-year fixed terms because they balance certainty with flexibility. That timeframe covers the period when household expenses are often highest, such as when managing young families or paying school fees, without locking them in for too long.
When Switching to Fixed Rate Makes Sense
Switching from variable to fixed rate through a refinance mortgage is worth considering if you are currently on a variable rate and rates have been rising, if you want stable repayments for a specific period, or if your budget cannot absorb further increases. It also makes sense if your current lender is offering you a fixed rate that is not competitive, and another lender can offer you a lower fixed rate when you refinance.
It does not make as much sense if rates are expected to fall soon and you would rather stay on a variable rate to benefit from those cuts. It also may not suit you if you plan to sell your property within the fixed rate period, because breaking a fixed rate early can result in significant exit costs.
What Happens to Your Current Loan Features
When you move from a variable rate to a fixed rate, you typically lose access to features like offset accounts and unlimited extra repayments. Fixed rate loans usually allow only a small amount of extra repayments each year, often capped at $10,000 or $20,000 depending on the lender. If you have been using an offset account to reduce interest, you will need to factor in the loss of that benefit when comparing your variable rate to the fixed rate you are considering.
Some lenders offer a split loan structure, where you fix part of your loan and leave the rest on a variable rate. This approach lets you lock in some certainty while keeping access to flexible features on the variable portion. If you have a healthy offset balance or regularly make extra repayments, a split structure may give you a better outcome than fixing the entire loan.
Comparing Lenders and Fixed Rate Options
Not all lenders offer the same fixed rates or loan features, so comparing your options is essential before you commit. Your current lender may offer you a fixed rate to retain your business, but that rate may not be as competitive as what you could access by refinancing to another lender. A loan health check can help you understand where your current rate sits compared to what is available in the market.
When comparing fixed rates, look at the interest rate itself, the length of the fixed term, any restrictions on extra repayments, and whether the lender charges break costs if you exit early. Also consider whether the lender offers the option to split your loan, as this can give you more control over how much certainty you lock in versus how much flexibility you keep.
Costs Involved in Refinancing to Fixed
Refinancing to switch from variable to fixed typically involves application fees, valuation fees, and potential discharge fees from your current lender. Some lenders waive application fees or cover valuation costs as part of a refinance offer, so it is worth asking what is included. If you are moving to a new lender, you may also need to pay for settlement costs and legal fees, though these are usually minimal if you are refinancing a standard home loan.
If you are currently on a fixed rate and want to switch to a different fixed rate with another lender, you may face break costs from your existing lender. These costs can be substantial, so it is important to calculate whether the rate saving from refinancing outweighs the exit penalty. If you are already on a variable rate, there are usually no break costs, making the switch to fixed more straightforward.
Call one of our team or book an appointment at a time that works for you. We will review your current loan, compare fixed rate options across multiple lenders, and help you refinance to a structure that gives you the certainty you need without losing features that matter.
Frequently Asked Questions
Can I refinance from variable to fixed rate with the same lender?
Yes, you can refinance to a fixed rate with your current lender. The process is often quicker because they already hold your loan details, though you should still compare their fixed rate offer to what other lenders are offering to confirm you are getting a competitive rate.
What happens to my offset account if I switch to a fixed rate?
Most fixed rate loans do not include offset accounts, so you will lose that feature when you switch. Some lenders offer split loans where you can fix part of your loan and keep an offset on the variable portion, which may be a suitable option if you have a healthy offset balance.
How long does it take to refinance from variable to fixed?
Refinancing to switch from variable to fixed typically takes two to six weeks, depending on the lender and whether you are staying with your current lender or moving to a new one. The timeline includes application, valuation, approval, and settlement.
Are there break costs if I refinance from variable to fixed?
If you are currently on a variable rate, there are usually no break costs when you switch to a fixed rate. Break costs only apply if you are exiting an existing fixed rate loan early, which can be expensive depending on rate movements since you locked in.
Should I fix my entire loan or just part of it?
That depends on how much certainty you need and whether you want to keep access to features like offset accounts or extra repayments. Fixing your entire loan gives you maximum protection from rate rises, while a split loan lets you lock in some certainty and keep flexibility on the variable portion.
