Certainty of rate
What does the fee actually buy?
Protection against an increase in the fixed rate between application and settlement — which matters most when settlement is a long way off.
MORTGAGE BASICS
Rate lock, and whether it is worth the fee
Fixed rates can move between the day you apply and the day you settle. Rate lock stops that, for a price.
IN SHORT
Rate lock secures a fixed rate before your loan settles
When you apply for a fixed rate loan, the rate you actually receive is normally the one on offer at settlement, not the one advertised when you applied. Between those two dates, sometimes weeks apart, the rate can move.
Rate lock is an optional feature offered by many lenders that holds the advertised fixed rate for a defined period, usually around ninety days, for a fee. If rates rise before settlement, you keep the locked rate.
If rates fall, most lenders will give you the lower rate anyway. That asymmetry is what makes rate lock worth considering — but the fee is real, and it is paid regardless of what happens.
WHY IT HELPS
What you are buying
Cover for a long settlement
When is the risk highest?
An off-the-plan purchase or an extended settlement leaves months of exposure. That is where a lock earns its fee most often.
Downside usually kept
What if rates fall instead?
Most lenders apply the lower of the locked rate and the rate at settlement, so you generally keep the benefit of a fall. Confirm this with the specific lender.
HOW IT WORKS
How it works in practice
The fee is typically charged either as a flat amount or as a percentage of the loan, and it is usually payable when you request the lock rather than at settlement.
- It is requested at or shortly after application, not later
- The lock runs for a set period, commonly around ninety days
- The fee is generally non-refundable, even if the loan does not proceed
- It applies only to the fixed portion of a split loan
- If settlement falls outside the lock period, the protection lapses
IS IT RIGHT FOR YOU
When to pay for it
This tends to suit you if
- Settlement is months away — off-the-plan and long settlements carry the most exposure.
- Rates are clearly trending up — the protection is worth more when movement looks likely.
- Your budget is tight — if a small rise would genuinely hurt, certainty has value.
- The fixed portion is large — the potential cost of a rise scales with the balance.
Worth weighing up
- The fee is paid either way — and is usually non-refundable if the loan does not proceed.
- Short settlements carry little risk — over a few weeks there is not much to protect against.
- It only covers the fixed portion — any variable part of a split loan is unaffected.
- Terms differ between lenders — check the period, the fee basis and what happens on a fall.
How working with us actually goes
Step 1
We start with a conversation, not an application
Step 2
We work out what you can borrow and what it costs
Step 3
We prepare the application and deal with the lender
Step 4
We stay across the loan long after settlement
COMMON QUESTIONS
Questions we get asked about this
How much does rate lock cost?
It is usually either a flat fee or a percentage of the fixed loan amount, and the basis varies between lenders. On a large loan a percentage-based fee can be substantial.
Because the structure differs, it is worth comparing the actual dollar figure rather than assuming it is a minor cost.
What happens if rates fall after I lock?
Most lenders apply the lower of the locked rate and the rate available at settlement, so you generally still benefit from a fall.
This is not universal, and it is the single most important thing to confirm in the lender's terms before paying the fee.
How long does the lock last?
Commonly around ninety days from when it is requested, though this varies between lenders.
If settlement is delayed beyond the lock period, the protection generally lapses and the rate reverts to whatever applies at settlement.
Can I get the fee back if the loan does not proceed?
Usually not. Rate lock fees are typically non-refundable once charged, even if the purchase falls through.
That is worth weighing where the purchase is not yet certain.
Does it apply to a split loan?
Only to the fixed portion. The variable part of a split loan moves with the market regardless.
So the fee should be assessed against the size of the fixed portion, not the whole loan.
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GET IN TOUCH
Find out where you stand before you commit to anything.
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(02) 9659 1694Important information
The information on this page is general in nature. It has been prepared without taking your objectives, financial situation or needs into account, so it is not personal advice and you should consider whether it is appropriate for you before acting on it.
Any rates, figures or examples shown are indicative only. Lending is subject to approval, and lender eligibility criteria, terms, conditions, fees and charges apply. Talk to us about what your own circumstances allow.