How soon after settlement can you change to fixed rate loan?

I’ve just had a formal loan approval for my first property with CBA. It was all organised through a mortgage broker. I’m just curious - I said I wanted a fixed rate but the broker said it would be best to get approval with variable and then change to fixed rate after the loan has settled. Why is that? Is it harder to get approval for fixed rate? The broker mentioned they will be able to change the loan to fixed rate within 5-7 days of the loan settling (I assume that means after settlement?). I hope that’s true? I haven’t signed the loan documents yet but it is stated as a variable loan so I guess I’m just looking for peace of mind that I don’t somehow get stuck with a variable loan.

 

can't see why it couldn't be done on the day of settlement

 

Your broker may be trying to avoid re-work changing from var to fixed prior to you signing the documents. Changing to fix(prior to settlement) means bank has to issue loan docs again.
You can change to fixed rate anytime after settlement but you may not get the most competitive rate that the new customers get.
Banks usually don't give the same rate to existing customer that they give to new customers.

Also, variable rate you have got may not have the recent rba rate cut factored in.

If you are not in huge hurry, you can still negotiate with bank via broker and get a revised rate (fixed or variable). All this means more work for your broker without extra incentive of course.

 

Cba didn't pass on any variable cut anyway.

Good for OP not fixing anyway as cba has now cut fixed rates.

 

From the broker perspective I could see a borrower directly switch to fixed and full clawback !! Probably a "problem" the broker should support

 

Generally this wouldn't be a clawback if staying at the same bank

 

Thanks for the responses. It would definitely be staying with the same bank. I thought there might be some reason why they went for pre-approval (and now formal approval) on a variable rate? I said from the start (before getting pre-approval) that I wanted fixed rate but they said that we can work that out later and that it would be easier to go through the process with a variable rate. Anyway, as long as I can change to fixed rate after settlement I guess it doesn’t matter.

 

You should be able to fix as soon as it settles. CBA are pretty easy to deal with post settlement. Ask your broker to sort out.

Cheers

Jamie

 

It can be done immediately, but wait until the 16th. By that time the CBA will have dropped most of their fixed rates. If you fix today, you'll kick yourself next week.

 

Many lenders have "issues" with fixing a loan that doesnt exist and rate lock issues get involved. Its easy to go variable to fixed once its an account. Paperwork will be involved since you will be agreeing to a range of issues including breakcosts etc. Disclosures etc and its a new contract. But can be issued quickly, signed then put in place easily. Some lenders will change the account number. Then there can also be a split so some is variable and some fixed. That may be important if you plan to make extra repayments. Generally fixed loans cant have a offset either.