What is a revert rate?

Revert rate graphic

A high revert rate on your home loan can give you a nasty shock. Learn how to protect yourself.

If you’ve been combing through your home loan documents, you might have come across the term “revert rate”. Alongside this term, you’ve no doubt noticed a second interest rate that’s entirely different from the one you signed up for. Confusing, to say the least.

Let’s take a look at what this rate is exactly, and find out how it could impact you.

What is a revert rate?

A revert rate is an interest rate that fixed and introductory rate home loans reset to at the end of a predetermined term. It is generally higher than the rate you pay at the start of the loan period. Lenders often use a revert rate as a way of recouping the cost of a great deal they might offer for a certain period of time.

For instance, you might have been awarded a very low rate on your home loan for the first couple of years. During this period, your lender makes a slimmer profit on the net interest margin. This describes the difference between the interest rate you’ve been given, and the rate the bank pays to fund your loan.

Obviously, a bank wants to maximise the net interest margin of its loan book. By resetting your home loan to a higher revert rate, they widen the interest margin they make on your mortgage.

What sort of home loans carry a revert rate?

There are generally two different types of home loan products that revert rates apply to:

  • Fixed rate loans
  • Introductory rate loans

A fixed rate home loan means your interest rate won’t change for a predetermined period of time, generally between one and five years. This can work to the bank’s advantage if market rates fall during the fixed rate period, but works to your advantage if rates rise. A revert rate is one of the ways a bank mitigates this risk.

At the end of the fixed rate period, if you take no action, your loan will automatically roll over to a variable revert rate. If you’re not paying attention, this can come as a nasty shock.

An introductory rate home loan, is a variable rate home loan that offers a discount off the lender’s standard variable rate for a predetermined period of time, usually one or two years. At the end of this period, your loan could reset to the bank’s standard variable rate or to a higher revert rate.

Again, if you don’t take any action, you could end up surprised by a much higher monthly repayment.

How much higher is the revert rate from the rate I’m paying now?

The difference between the rate you’re paying and the revert rate can be pretty significant. For instance, a search of finder.com.au’s database as of November 2017 revealed the average difference between a one-year fixed rate and the revert rate is 0.69%. The average difference between a three-year fixed rate and the revert rate is 0.66%.

Suppose you were on a three-year fixed rate of 4.00% for a $500,000 loan. How would the higher revert rate affect your repayments?

    • Original rate: 4.00%
    • Monthly repayment: $2,387.
  • Revert rate: 4.66%
  • New monthly repayment: $2,581

That's an extra $194 per month. If you make repayments for 10 years at this rate you'll end up paying an extra $23,280 on your home loan.

What can I do about a high revert rate?

The best thing you can do to protect yourself from a high revert rate is to negotiate with your lender as the end of your fixed rate or introductory rate period approaches. You may be offered the opportunity to fix your rate for another term, or be able to settle on a discounted rate.

If your lender isn’t willing to negotiate, it’s time to look at refinancing. There is a plethora of great home loan deals on the market, so it’s important to compare loans as the end of your fixed or introductory period approaches.

Keep in mind, that moving to a new home loan will come with some costs. You can use the calculator on this page to crunch the numbers and make sure you’ll come out ahead if you refinance.

If you’ve checked the figures and decided to refinance, you can compare loans in the table near the top of this page. Or, if you want to learn more about the refinancing process, you can read our comprehensive refinancing guide.

Compare refinance home loans today

Rates last updated May 21st, 2018
$
% p.a.
Offset account
Split account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Maximum Insured LVR Amount Saved Short Description
3.69%
3.69%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.64%
3.67%
$0
$0 p.a.
80%
A mortgage with a competitive variable rate, limited fees and plenty of flexibility.
3.69%
3.69%
$0
$0 p.a.
70%
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.64%
4.03%
$0
$395 p.a.
80%
New borrowers or refinancers from another lender get a discounted rate with this package loan.
3.62%
3.62%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Refinance to a UBank loan and you could get $1,000 in your USaver account (offer conditions apply).
3.64%
3.64%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at 70% or below with this innovative online lender.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Get a 100% offset account to save on interest charges, and pay no application fee.
3.69%
3.71%
$0
$0 p.a.
80%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.69%
4.06%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.70%
4.13%
$0
$395 p.a.
90%
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.88%
4.89%
$0
$395 p.a.
95%
Low deposit home loan. Enjoy flexible repayment options while paying limited fees.
3.49%
4.49%
$0
$395 p.a.
90%
Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.
3.77%
3.81%
$200
$0 p.a.
95%
A simplified mortgage with a low interest rate and a redraw facility.
3.58%
3.58%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.69%
3.94%
$0
$248 p.a.
70%
Get a sharp rate and a 100% offset account. Borrowers must have a 30% deposit.
3.64%
3.64%
$0
$0 p.a.
70%
A basic variable home loan that offers a competitive interest rate with no application fees and no ongoing fees.
3.68%
3.69%
$0
$0 p.a.
95%
This variable rate loan offers flexible repayments and a redraw facility. Available with a 5% deposit.
3.79%
3.79%
$0
$0 p.a.
80%
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan.
3.74%
3.74%
$0
$0 p.a.
80%
A basic owner-occupier home loan with a low variable rate that requires a 20% deposit.
3.69%
3.73%
$600
$0 p.a.
95%
Variable rate home loan from one of the big 4 banks. Available with just a 5% deposit.
3.74%
3.74%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.79%
3.81%
$0
$0 p.a.
90%
Buy your home with just a 10% deposit, few fees and a reasonable interest rate.
3.73%
3.73%
$0
$0 p.a.
80%
Get a 100% offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.71%
3.71%
$0
$0 p.a.
70%
A variable rate home loan that has a lot of flexible features. This loan has a 100% offset account.
3.69%
4.47%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
3.65%
3.66%
$0
$0 p.a.
80%
This special rate loan comes with no application or ongoing fees, and offers a flexible repayment schedule.
3.78%
3.78%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.69%
4.11%
$0
$395 p.a.
80%
Save on interest with a 100% offset account and save on other ME products with this package loan.
3.89%
4.87%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying and pay no application or ongoing fees.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.62%
3.62%
$0
$0 p.a.
95%
Free home and contents insurance for 1 year. Terms and conditions apply. QLD residents only.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.85%
4.05%
$0
$350 p.a.
95%
This high LVR fixed rate loan allows you to borrow up to 95% of the value of the property you're buying.
4.09%
4.11%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Points on your mortgage (for a limited time, subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
4.09%
4.12%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and get flexible repayment options and a redraw facility.
3.99%
4.03%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and pay no application or ongoing fees.
3.59%
4.42%
$600
$0 p.a.
95%
Get a 1% discount for the first two years of your loan and pay no application or ongoing fees.
3.68%
3.69%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.89%
4.97%
$0
$395 p.a.
95%
Get discounts on a range of Commonwealth Bank products and enjoy the option of fee-free extra repayments during the fixed term.
3.89%
4.96%
$0
$395 p.a.
95%
Refinancers can get $1,500 cashback. Conditions apply. Package your home loan with a Qantas rewards earning Amplify credit card.
3.89%
4.88%
$0
$395 p.a.
95%
Refinance from your existing loan and get a $1,250 rebate. Terms and conditions apply. Plus get discounts on a range of Westpac products.

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Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

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