Variable rate climbing month after month? Switching to a fixed rate through refinancing could lock in your repayments for years.
Your home loan doesn't need to stay as it is. Many Campbelltown homeowners who locked in low fixed rates a few years back are now facing variable rates again, and those who've been on variable all along might be looking at their repayments wondering how much more they can absorb. If your rate has crept up or you're about to come off a fixed period, refinancing to a new fixed rate gives you certainty over what you'll pay each month.
Why Homeowners in Campbelltown Are Considering Fixed Rates Now
Campbelltown's property market has seen plenty of movement over recent years. With median house prices in suburbs like Bradbury and Glen Alpine sitting around the $700,000 to $850,000 range, and apartment values in the town centre hovering between $450,000 and $550,000, homeowners here often carry substantial loan amounts. When you're managing a mortgage of $600,000 or more, even a quarter percent shift in your variable interest rate can mean hundreds of dollars extra each month.
Consider someone who purchased in Leumeah three years ago with a $650,000 loan. They took a variable rate loan at the time, and since then, their rate has increased four times. Their monthly repayments have jumped from around $3,200 to nearly $4,000. That's an extra $800 a month, or close to $10,000 a year. For households managing childcare costs, fuel for the commute to Sydney, and everyday expenses, that increase hits hard. Switching to a fixed rate through a refinance home loan means they know exactly what they're paying for the next two, three, or five years, depending on the term they choose.
What Happens When You Refinance to Lock in a Rate
Refinancing to switch from variable to fixed rate means replacing your current loan with a new one that has a fixed interest rate for a set period. You're not making changes to your existing loan, you're applying for a completely new product, usually with a different lender. The new lender pays out your old loan, and you start making repayments under the new terms.
The process involves a property valuation, an assessment of your current financial position, and confirmation that you can service the new loan amount. Most lenders will want to see recent payslips, bank statements showing your expenses, and details of any other debts you're carrying. If you've built up equity in your property since you first bought, that works in your favour. Campbelltown properties have generally held their value or increased over the past five to ten years, so many homeowners sitting on a loan that's now 70% or less of their property's current value will find they have options.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Red Sea Lending today.
Fixed Rate Break Costs: How the Calculation Works
If you're currently on a fixed rate and want to refinance before it ends, you'll likely face break costs. These are fees the lender charges because they've locked in funding based on your loan staying in place for the full fixed period. The calculation compares the interest rate you're paying to the rate the lender could earn if they lent that money out again today.
When rates have risen since you fixed, break costs are often minimal or zero, because the lender can re-lend your money at a higher rate. When rates have fallen, the costs can run into thousands of dollars. In our experience, most people coming off a fixed rate period now are doing so because that period is ending naturally, not because they're breaking early. If your fixed rate period is within six months of expiry, it's worth getting a loan health check to see what rates are available and whether waiting a few more months makes sense or if moving now still delivers enough benefit.
How to Know If Switching to Fixed Makes Sense for You
Not everyone benefits from switching to fixed. If your variable rate is already sitting at a level you can manage comfortably, and you value the flexibility to make extra repayments without restrictions, staying variable might suit you. Fixed rate loans often come with limits on extra repayments, typically around $10,000 to $30,000 per year depending on the lender. If you're planning to sell within the next year or two, or if you regularly make lump sum payments from bonuses or investment income, those restrictions might outweigh the benefit of rate certainty.
But if your household budget is tight, or if you're concerned about further rate increases over the next few years, locking in removes that uncertainty. As an example, a family in Macarthur Heights with a $720,000 loan and two kids in school might prioritise knowing their repayments won't change for the next three years. They can budget for school fees, plan a holiday, or manage one income if someone takes parental leave, all without worrying about another rate rise pushing repayments beyond what they can handle. That certainty has real value when you're managing a household.
What to Look for Beyond the Interest Rate
When you refinance to switch to fixed, the interest rate matters, but it's not the only factor. Check whether the loan includes an offset account or redraw facility. Some fixed rate loans don't offer offset accounts, which means any savings you hold won't reduce the interest you're charged. If you typically keep $20,000 or $30,000 in savings, losing access to an offset could cost you more than you gain from a slightly lower rate.
Redraw availability also varies. Some lenders allow you to access extra repayments you've made during the fixed period, others don't. If you're likely to need that money for car repairs, medical expenses, or home maintenance, make sure the loan allows it. You'll also want to consider whether you might want to access equity down the line. If you're thinking about an investment loan in a few years to purchase a second property, or if you're planning renovations, make sure your new loan structure supports that without requiring another full refinance.
Moving Forward with Your Application
Once you've decided to refinance, the application process typically takes two to four weeks from start to settlement. You'll need to provide documentation, arrange a property valuation, and review the loan contract before signing. Most lenders will conduct a formal assessment of your income, expenses, and existing debts to confirm you can afford the new repayments. If you've taken on new financial commitments since you first borrowed, like a car loan or personal loan, those will be factored in.
Campbelltown residents often work with a mortgage broker in Campbelltown to compare products across multiple lenders. A broker can submit your application to lenders who are more likely to approve based on your situation, which saves time and reduces the chance of a declined application affecting your credit file. They'll also help you understand the features of each product, so you're not just choosing based on rate alone.
If you're weighing up whether refinancing to switch from variable to fixed rate makes sense for your situation, call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can I refinance to a fixed rate if my current fixed period hasn't ended yet?
Yes, but you'll likely face break costs if you exit a fixed rate early. These costs depend on how much time is left and whether interest rates have risen or fallen since you fixed. If your fixed period ends within six months, it's often worth waiting unless the new rate delivers significant ongoing benefit.
How long does it take to refinance from variable to fixed rate?
The refinance process typically takes two to four weeks from application to settlement. This includes property valuation, document verification, loan approval, and final settlement. The timeline can vary depending on how quickly you provide documents and whether any issues arise during the valuation or assessment.
Will I lose my offset account if I switch to a fixed rate loan?
It depends on the lender and product. Some fixed rate loans include offset accounts, while others don't. If you rely on an offset to reduce interest on your savings, make sure the new loan offers this feature, as losing it could cost you more than you save from a lower rate.
What happens to my repayments when I refinance to a fixed rate?
Your repayments will be set at a fixed amount for the duration of your fixed rate period, typically two to five years. They won't change even if variable rates rise or fall during that time. Once the fixed period ends, you'll revert to a variable rate unless you refinance again.
Do I need equity in my property to refinance to a fixed rate?
You don't necessarily need additional equity, but having at least 20% equity in your property gives you access to more lenders and often results in lower rates. If your property has increased in value since you purchased, this equity can work in your favour during the refinance application.
