Why Should Magistrates Refinance to Fixed Rate Now?

Why Refinance from Variable to Fixed Rate?

Refinancing from a variable to a fixed rate lets you lock in a known interest rate for a set period, typically one to five years. That certainty means your repayments won't change if the Reserve Bank adjusts the cash rate or your lender moves rates independently.

For magistrates with stable income and foreseeable expenses, the appeal is straightforward. You can budget with confidence, knowing exactly what your repayments will be over the fixed term. The trade-off is reduced flexibility: most fixed rate loans limit or prohibit additional repayments beyond a small annual threshold, and you lose ongoing access to offset accounts and redraw facilities during the fixed period.

Consider a magistrate who refinanced a $650,000 variable loan to a three-year fixed rate when variable rates were volatile. The variable rate had climbed over the previous twelve months, and they wanted to remove the uncertainty around repayments while their children were in their final years of schooling. By locking in a fixed rate, they secured monthly repayments that didn't shift, even when the variable rate edged higher six months later. The outcome was predictable cashflow, which mattered more to them than the flexibility of making extra repayments during that period.

How Does the Refinance Process Work?

You submit a refinance application to a new lender or your current lender if they offer a fixed rate product you prefer. The lender assesses your income, expenses, and property value, then provides a formal approval with the fixed rate and term specified. Once approved, your new loan settles, the existing variable loan is discharged, and your repayments switch to the fixed rate structure.

The process typically takes two to four weeks from application to settlement, depending on how quickly you provide documentation and whether the lender requires a property valuation. Some lenders waive valuations if they hold sufficient data on your suburb and property type, which can shorten the timeline. If you're refinancing to access equity at the same time, expect the process to take slightly longer due to the additional assessment involved.

What Are the Costs of Refinancing?

Discharge fees from your current lender usually sit between $150 and $400. Application fees with the new lender vary, but many lenders waive them as part of refinance offers. Settlement fees typically range from $200 to $600, and if a property valuation is required, that adds another $200 to $300.

If you're exiting a fixed rate loan early to refinance into another fixed rate, break costs can apply. These costs reflect the lender's funding loss when you repay the loan before the fixed term ends. Break costs depend on the difference between your fixed rate and the current wholesale rate, the remaining fixed term, and your outstanding balance. In a falling rate environment, break costs can be substantial. In a rising rate environment, they're often minimal or zero because the lender can redeploy your funds at a higher rate.

In the example above, the magistrate was already on a variable rate, so no break costs applied. The total refinancing costs came to around $800, which they recovered within the first few months through the rate difference between their old variable loan and the new fixed rate.

Should You Fix the Entire Loan or Split It?

You can fix your entire loan amount or split it between fixed and variable portions. A split structure gives you rate certainty on the fixed portion while keeping flexibility on the variable portion. The variable portion allows additional repayments, redraw access, and use of an offset account, which can reduce interest over time if you maintain a buffer in the offset.

A common split is 50/50, but the ratio should reflect your priorities. If you want maximum certainty and don't expect to make additional repayments, fixing the entire loan makes sense. If you anticipate bonuses, tax refunds, or other lump sums that you want to apply to the loan, keeping a portion variable preserves that option. You can read more about refinancing your home loan to understand the broader structural options available.

What Happens When the Fixed Rate Period Ends?

When your fixed term ends, your loan reverts to the lender's standard variable rate unless you negotiate a new fixed rate or refinance again. The revert rate is almost always higher than the discounted variable rates offered to new customers, which means your repayments will likely increase unless you take action before the fixed term expires.

Most lenders contact you 60 to 90 days before your fixed rate ends, but waiting for that contact puts you at a disadvantage. You should review your options at least three months out, either by negotiating directly with your lender or by applying to refinance elsewhere. This is effectively a fixed rate expiry scenario, and the process mirrors any other refinance.

If you're approaching the end of a fixed term and want to lock in another fixed rate, starting early gives you time to compare offers and settle the new loan before the revert rate applies.

Does Refinancing to Fixed Rate Make Sense for Investment Properties?

It can, but the calculation is different. Investment loans often benefit from the flexibility of a variable rate with an offset account, particularly if you maintain a cash buffer that offsets interest while remaining accessible. Fixing an investment loan removes that flexibility, so the decision hinges on whether rate certainty outweighs the loss of offset functionality.

If you hold multiple properties and want to fix one loan while keeping others variable, that's a workable strategy. You can also structure an investment loan as a split, fixing a portion for certainty while keeping enough variable to utilise an offset. For magistrates looking to expand their property holdings, expanding your property portfolio covers the financing structures that support multiple properties.

What Lenders Offer Suitable Fixed Rate Products for Magistrates?

Most major lenders offer fixed rate home loans, but the rates, terms, and conditions vary. Some lenders provide lower fixed rates but restrict additional repayments entirely. Others allow up to $10,000 or $20,000 in extra repayments per year during the fixed term, which can suit magistrates who want some flexibility without fully committing to a variable loan.

As a magistrate, you may also have access to professional package discounts that reduce fixed rates further or waive certain fees. Not all lenders offer these packages, and eligibility criteria differ, so it's worth comparing across multiple lenders rather than accepting your current lender's offer by default. We regularly work with magistrates to identify lenders that recognise your profession and adjust pricing accordingly.

When Should You Refinance to Lock in a Fixed Rate?

Timing depends on where you think rates are heading and how much certainty you need. If you believe variable rates will rise or remain elevated, refinancing to a fixed rate now can protect you from further increases. If you think rates will fall, locking in a fixed rate could mean you miss out on lower variable rates later.

That said, refinancing decisions shouldn't be purely speculative. If your current variable rate is causing budgeting uncertainty or if you want known repayments for a specific life stage, such as a period of parental leave, study, or career transition, the certainty of a fixed rate can justify the trade-off regardless of rate forecasts.

In the earlier example, the magistrate refinanced when variable rates had already risen significantly. They didn't try to time the market perfectly; they prioritised certainty over speculation, which aligned with their financial goals at that point.

What Documentation Do You Need for a Refinance Application?

Lenders require recent payslips, usually the last two or three months, plus your most recent Notice of Assessment from the Australian Taxation Office. If you have investment income or other sources beyond your magistrate salary, you'll need rental statements, trust distributions, or other supporting documents.

You'll also need a current statement for your existing home loan, which shows the outstanding balance and any linked accounts. If you're refinancing to access equity, the lender will assess your property's current value, either through a desktop valuation or a formal inspection. Some lenders accept automated valuations for straightforward refinances, which speeds up the process.

The application itself is similar to any other home loan application, but because you already own the property and have an existing loan history, lenders often process refinances faster than purchase loans. You can explore the full refinancing process to understand what's involved at each stage.

Can You Access Equity When Refinancing to a Fixed Rate?

You can. If your property has increased in value since you purchased it, refinancing lets you access that equity while also switching from variable to fixed. The new loan amount includes your existing balance plus the equity you're releasing, and the entire amount can be fixed or split between fixed and variable portions.

Magistrates often use this approach to fund investment property deposits, renovations, or debt consolidation. The equity release doesn't change the refinance process significantly, but it does require a property valuation and a slightly higher loan-to-value ratio, which may affect the rate or require lenders mortgage insurance depending on your circumstances. For more detail on this, see equity release loans.

If you're accessing equity and fixing the rate simultaneously, confirm with the lender whether the fixed rate applies to the entire new loan amount or only to the original balance. Some lenders allow you to fix the full amount, while others may require a split structure.

Call one of our team or book an appointment at a time that works for you to discuss whether refinancing to a fixed rate suits your current position and what structure makes sense given your income, property, and repayment preferences.

Frequently Asked Questions