Understanding the Basics of Switching Fixed to Variable

Why Public Health Dentists Refinance from Fixed to Variable

Refinancing from a fixed rate to a variable rate typically happens when your fixed period expires or when you need features that a fixed loan doesn't provide. Public health dentists often refinance to access offset accounts, redraw facilities, or release equity without paying break costs.

Your fixed rate arrangement offered certainty, but as a salaried dentist in public health, your financial priorities may have shifted since you first locked in that rate. Consider a scenario where you secured a three-year fixed rate during the pandemic. You're now approaching the end of that period, your repayments are about to revert to the lender's standard variable rate, and you've realised you need access to an offset account to manage irregular locum income or you're planning to retain your current property when you purchase your next home. Refinancing to a variable rate gives you that flexibility along with the option to make extra repayments without restriction.

The difference in ongoing costs depends on where variable rates sit when your fixed period ends versus your current fixed rate. If the lender's revert rate is substantially higher than current variable offers elsewhere, refinancing can reduce your repayments while simultaneously improving loan features. In our experience, many public health dentists who locked in rates during 2021 and 2022 are now reviewing their loans as those fixed periods conclude.

When Does Refinancing to Variable Make Sense

You should refinance to variable when the value of flexibility or the cost saving outweighs any break costs and application effort. If you're still mid-fixed-term, break costs can be significant, sometimes running into thousands of dollars depending on rate movements since you fixed.

For public health dentists specifically, this decision often centres on changing employment circumstances. You might be moving from full-time salaried work into a mix of public sessions and private locum work, which creates variable income that benefits from offset account functionality. Or you might be planning to purchase an investment property and need to access equity from your current home, which most fixed loans restrict.

If your fixed rate period is ending within the next three to six months, lenders will typically let you start the refinance application without triggering break costs. That timing window matters because approval and settlement can take four to eight weeks depending on valuation requirements and whether you're moving to a new lender or staying with your current one.

The Refinance Application Process for Switching Rate Types

The application itself mirrors a standard refinance process, but with attention to your current loan's exit terms. You'll need to provide recent payslips, your employment contract, and details of any additional income such as locum work or teaching sessions at dental schools.

Lenders will order a property valuation to confirm your current equity position. This valuation determines your loan-to-value ratio, which in turn affects the interest rate you're offered and whether you'll need to pay lender's mortgage insurance if you're borrowing additional funds. Public health dentists typically have stable employment, which lenders view favourably, but if you've recently moved from private practice into a public role, be prepared to explain that transition and provide documentation showing your ongoing employment status.

Your new variable loan will likely include features your fixed loan didn't permit: an offset account, unlimited additional repayments, redraw access, and the ability to split your loan into fixed and variable portions in future if rates shift again. Some lenders also offer rate discounts for professionals including dentists, which can reduce your ongoing interest rate by 0.10% to 0.30% depending on the lender and your loan amount.

Fixed Rate Break Costs and Timing Your Switch

Break costs apply when you exit a fixed rate loan before the end of your agreed term. The calculation compares the interest rate you're currently paying with the rate the lender could now charge on a fixed loan for the remaining period of your original term.

If rates have risen since you fixed, the lender can now lend that money out at a higher rate, so the break cost is usually zero or minimal. If rates have fallen, the lender loses income, and you'll be charged to compensate them for that difference across the remaining months of your fixed period. This can run from a few hundred dollars to several thousand depending on your loan amount and how far rates have moved.

For a public health dentist weighing whether to exit a fixed loan early, the decision turns on whether the benefit of switching outweighs the break cost. If you need to release equity to purchase an investment property and can't do so on your current fixed loan, the break cost may be worth paying to avoid missing a property opportunity. Alternatively, if you're simply looking for lower repayments and your fixed rate is already competitive, it may make more sense to wait until your fixed period ends naturally.

What Happens When Your Fixed Rate Period Ends

When your fixed rate period concludes, your loan automatically reverts to your lender's standard variable rate. This revert rate is typically higher than the discounted variable rates offered to new borrowers, which means your repayments can increase substantially if you don't take action.

Many public health dentists assume they need to refinance to a new lender to secure a lower rate, but your current lender may offer you a retention rate if you contact them before the fixed period ends. That rate will often sit between the revert rate and the rates advertised to new customers. Refinancing to a different lender typically delivers the lowest rate, but it also involves a full application, valuation, and settlement process.

If you're content with your current lender and the retention rate they offer is competitive, staying put saves time and avoids application fees or discharge costs. If the retention rate is still substantially higher than what's available elsewhere, moving to a new lender makes sense. A loan health check three to four months before your fixed period ends gives you time to compare options and complete the refinance before your rate reverts.

Offset Accounts and Cashflow Flexibility for Salaried Dentists

Variable rate loans typically include offset account access, which reduces the interest you pay by offsetting the balance in your transaction account against your loan amount. For public health dentists who might hold funds for upcoming tax liabilities, conference expenses, or professional development, an offset account delivers ongoing interest savings without locking those funds away.

Unlike a redraw facility, which requires you to withdraw funds you've already paid into your loan, an offset account keeps your money separate and instantly accessible. This matters if you're managing irregular income from locum sessions alongside your salaried role, or if you're holding a deposit for your next property purchase while waiting for settlement.

The interest saved through an offset account compounds over time. At current variable rates, every $10,000 sitting in an offset account reduces your annual interest by roughly $500 to $600 depending on your loan's interest rate. For a public health dentist holding $30,000 to $50,000 in savings or working capital, that offset benefit can exceed $2,000 per year, which is often more than enough to justify refinancing from a fixed loan that doesn't offer offset functionality.

Call one of our team or book an appointment at a time that works for you. We'll review your current fixed loan, calculate any break costs, and compare your refinance options across lenders who understand how public health employment and locum income work together.

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