Key takeaways
- Leaving a fixed rate early can trigger a break cost, which depends on the time left and how rates have moved since you fixed.
- If rates have risen since you fixed, the break cost is often small or nil. If they've fallen, it can be large.
- Most people get the best result by planning the refinance for the end of the fixed term, before rolling onto the revert rate.
- Ask your lender for a written break cost quote before deciding. It changes daily.
Thinking about switching? See how our free refinance review works.
Can you refinance while on a fixed rate?
Yes. Nothing stops you, but your lender can charge a break cost to cover what it loses when you leave before the fixed term ends. Whether refinancing makes sense comes down to one comparison: the saving from the new loan against the break cost plus normal switching costs.
How are break costs calculated?
Broadly, lenders compare the rate they fixed your loan at with the rate they could get today for the remaining term. If wholesale rates have fallen since you fixed, the lender loses money when you leave and passes that on. If rates have risen, there may be little or no break cost. The balance and time remaining also matter. See break costs, before they surprise you.
When can breaking a fixed rate still pay off?
- The break cost is small because rates have risen since you fixed.
- Only a few months remain, so the cost is limited.
- You need to refinance for another reason, such as consolidating expensive debt or releasing equity, and the break cost is outweighed by that benefit.
- You're selling, and the break cost would apply anyway.
What if your fixed term is about to end?
This is the most common refinance trigger. When a fixed term ends, the loan usually rolls onto a variable revert rate, which is often higher than the rates lenders offer new customers. Start reviewing your options around two to three months before the end date. That gives time to compare, apply and settle so the new loan starts as the fixed period finishes, with no break cost.
Fix again, go variable or split?
There's no single answer. Fixing gives certainty; variable gives flexibility, usually unlimited extra repayments and an offset account; a split gives some of both. The right mix depends on your budget, plans to sell or renovate, and how much you want to pay down. See fixed or variable? How to actually decide.
Check the extra repayment limits
Many fixed loans cap extra repayments. Paying above the cap can trigger break costs, even without refinancing. If you plan to pay down a lump sum, check the limit first.
Is it worth breaking your fixed rate?
We'll get the break cost figure, compare it with the saving and show you whether to switch now or plan for the end of your term.
Book your free game plan callGeorge Karpathakis, Co-Founder & DirectorYour enquiry comes straight to our team. We usually reply within one business day.
Frequently asked questions
How do I find out my break cost?
Ask your lender for a written break cost quote. It changes with market rates, so get it close to when you decide.
Is there a break cost when my fixed term ends?
No. Once the fixed period ends, you can refinance without a break cost.
Can I split my loan to reduce the risk?
Yes. Fixing only part of the loan limits your exposure to break costs and keeps some flexibility.
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This guide is general information only and does not take your personal circumstances into account. It is not financial, credit, tax or legal advice. Examples are illustrative only. Government schemes, lender policies and rates change over time and eligibility criteria apply. Speak with us for advice tailored to your situation. LendQuest Pty Ltd is a credit representative (555514) of BLSSA Pty Ltd, Australian Credit Licence 391237.