Locking in a fixed rate home loan? Your revert rate could be 1.00% higher
Right now, home loan interest rates are at an all time low, and if you were thinking about locking in a fixed rate to take advantage, you wouldn’t be the only one. But are you prepared for the sky high revert rate that could be waiting just around the corner?
For the unaware, a home loan revert rate is the rate you’ll be looking at once the fixed term or introductory rate on your home loan is up. It kicks in automatically and is typically much higher than the rate you signed up for — sometimes by up to 1.00%.
While all this will be spelled out in the fine print of your home loan, lenders might not draw attention to the fact when you sign up. For that reason, they can come as quite a surprise to mortgage holders, especially when the news of that first hike in monthly repayments hits.
How much higher is the revert rate?
If you don’t take any action when your fixed or introductory period ends, the interest rate on your home loan will revert back to the standard variable interest rate offered by your lender, or perhaps one even higher.
The difference between the revert rate and the original rate can be quite steep. For example, at the time of writing, the average one year fixed rate in our database sits at 3.35% p.a., while the average revert rate is a much higher 3.92% p.a. That’s an increase of 0.57% p.a.
To put things into perspective, an increase of that size on a home loan of $400,000 (OO, P&I, LVR 80%) would result in an extra $124 in monthly repayments.
Average fixed rate home loan
Term | Average fixed rate | Average revert rate | Difference |
---|---|---|---|
1 year fixed (OO, P&I) | 3.35% p.a. | 3.92% p.a. | 0.57% |
2 year fixed (OO, P&I) | 3.20% p.a. | 3.92% p.a. | 0.72% |
3 year fixed (OO, P&I) | 3.24% p.a. | 3.92% p.a. | 0.68% |
Among the major banks, the difference is even greater. Say you’ve signed up for a 1 year fixed rate home loan with one of the big four. On average, you can expect a revert rate that’s a staggering 1.38% higher than your original rate.
With the average one year fixed rate from the big four coming in at 3.41% p.a., an increase of that size would add around $300 to your monthly repayments, or upwards of $3,600 over the year.
How can you avoid a revert rate?
If you’re on a fixed rate home loan and the fixed term is nearing its end, you’ll have a few options available to you. You can let your lender know you intend to re-fix, or you can pay a switch fee to change over to another loan offered by the same lender - one with a more attractive rate.
If the rates on offer aren’t too appealing there’s also the option to refinance. This can involve a fair bit of paperwork and occasionally fees, but there’s a good chance it will be worth it in the long run, so make sure you consider your options carefully.
To give you an idea of how much you stand to save, be sure to use our switch and save calculator. And to compare the rates currently on offer, visit our home loans comparison page, or have a quick browse of the selection below.
Home loan comparisons on Mozo - rates updated daily
Smart Booster Home Loan
1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR
interest rate
comparison rate
Initial monthly repayment
1.99% p.a.variable for 12 months and then 2.48% p.a. variable2.47% p.a.A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.
Smart Booster Home Loan
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.
- interest rate
- 1.99% p.a.variable for 12 months and then 2.48% p.a. variable
- comparison rate
- 2.47% p.a.
- Upfront fees
- $520
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - with 0.10% additional interest
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $1,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Smart Booster Home Loan
UHomeLoan
Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment
1.75% p.a.
fixed 3 years2.22% p.a.$0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.
UHomeLoan
$0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.
- interest rate
- 1.75% p.a.
fixed 3 years
- comparison rate
- 2.22% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free up to $20,000 p.a.
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- $395 Establishment fee waived for fixed rate loans that settle by 30 September 2022. Receive 1.75% 3 year fixed rate when you apply by 29 April 2021 and settle within 90 days.
Read our Mozo Review to learn more about the UHomeLoan
Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
interest rate
comparison rate
Initial monthly repayment
2.09% p.a.
fixed 3 years2.43% p.a.Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.
Basic Home Loan
Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.
- interest rate
- 2.09% p.a.
fixed 3 years
- comparison rate
- 2.43% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $750,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Basic Home Loan
Celebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
interest rate
comparison rate
Initial monthly repayment
2.19% p.a. variable2.19% p.a.Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.
Celebrate Variable Home Loan
Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.
- interest rate
- 2.19% p.a. variable
- comparison rate
- 2.19% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Celebrate Variable Home Loan
- Hot Deal$3,000 cashback when you refinance with Virgin Money (T&Cs apply)
Special Offer Reward Me Fixed Rate Home Loan
Owner Occupier, LVR <80%, 300k+
interest rate
comparison rate
Initial monthly repayment
1.94% p.a.
fixed 2 years2.77% p.a.Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.
Special Offer Reward Me Fixed Rate Home Loan
Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.
- interest rate
- 1.94% p.a.
fixed 2 years
- comparison rate
- 2.77% p.a.
- Upfront fees
- $450
- Ongoing fees
- $10.00 monthly
- Discharge Fee
- $350.00
- Extra repayments
- yes - up to $10,000 per annum
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $300,000
- maximum borrowing amount
- -
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- $3,000 cashback for new borrowings of at least $300,000, applications by 28 May 2021, settled by 27 August 2021.
Read our Mozo Review to learn more about the Special Offer Reward Me Fixed Rate Home Loan
^See information about the Mozo Experts Choice Home Loans Awards
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