What are revert rates?
A revert rate is the interest rate that applies to your home loan once your fixed-rate period has ended. This rate is usually higher than your fixed rate and can result in higher monthly repayments. It’s essential to be aware of this rate, as it can have a significant impact on your household budget.
When your fixed-rate period ends, your lender will automatically switch your loan to the revert rate. Some lenders may contact you before the end of the fixed-rate period to offer you a new fixed-rate or variable-rate loan. However, if you don’t take any action, your loan will revert to the standard variable rate.
The standard variable rate is the interest rate that applies to a lender’s standard home loan product. It can be influenced by factors such as changes in the cash rate set by the Reserve Bank of Australia, market competition, and the lender’s funding costs. As a result, it can fluctuate over time, potentially resulting in changes to your monthly repayments.
Why should I know my revert rate?
Knowing your revert rate is essential because it allows you to plan your finances accordingly. If you’re happy with the revert rate, you can continue making your regular repayments. However, if the rate is higher than you anticipated, you may need to adjust your budget to accommodate the increased repayments. Alternatively, you may wish to consider refinancing to a better deal.
Refinancing involves switching your home loan to a different lender or product with a lower interest rate. This can help you save money on interest and reduce your monthly repayments. However, refinancing comes with costs, such as discharge fees, application fees, and legal fees. It’s important to weigh up the costs and benefits of refinancing before making a decision.
In summary, knowing your revert rate is crucial when coming off a fixed-rate home loan. It allows you to plan your finances and make informed decisions about your home loan. If the revert rate is higher than you anticipated, you may need to adjust your budget or consider refinancing to a better deal. Taking the time to understand your options can help you save money and achieve your financial goals.
Any advice provided is general in nature and should be considered in line with your financial situation, needs and objectives.
