Fixed gives you certainty. Variable gives you flexibility. Most people end up somewhere in between — and that's fine.
A variable rate loan moves with the market. When the Reserve Bank changes rates, your repayments go up or down accordingly. Variable loans usually come with useful features: offset accounts (where savings reduce the interest you pay), redraw facilities, and the freedom to make extra repayments whenever you want.
A fixed rate loan locks your interest rate for a set period — usually one to five years. Your repayments stay exactly the same each month, which makes budgeting straightforward. The trade-off is less flexibility: extra repayments are often capped, and breaking a fixed loan early can cost you.
A split loan is part fixed, part variable — you nominate what percentage goes each way. It's a common middle ground for people who want some payment certainty without giving up all flexibility.
Your rate moves with the market — usually following the Reserve Bank's cash rate. Variable loans typically include offset accounts, redraw, and unlimited extra repayments. More flexible, but less predictable.
Your rate is locked for 1–5 years regardless of what happens in the market. Repayments stay the same every month. Extra repayments are often limited, and breaking early usually has a cost — but you know exactly where you stand.
Fix part of your loan and keep the rest variable. You get repayment certainty on the fixed portion and flexibility on the rest — including offset and extra repayments on the variable side.
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Your repayments go up. Variable rates follow the market — when the Reserve Bank raises the cash rate, lenders typically pass that through to borrowers. The upside is that when rates fall, your repayments drop too. If the uncertainty bothers you, a fixed or split loan gives you more predictability.
Usually, yes — but with limits. Most fixed loans allow extra repayments up to a cap (often $10,000–$30,000 per year). Going above that, or paying off the loan early, can trigger a break cost. These can be significant depending on how rates have moved since you fixed. A broker will show you the fine print before you commit.
An offset account is a savings account linked to your home loan. The balance sits "against" your loan, so you only pay interest on the difference. If your loan is $500,000 and you have $50,000 in your offset, you only pay interest on $450,000. The money stays accessible — it's not locked away. Offset accounts come with variable loans, not fixed ones.
It depends on your situation. If you need payment certainty — say, you're on a tight budget or just want to know exactly what's coming out each month — fixed makes sense. If you want flexibility, plan to make extra repayments, or want to use an offset account, variable suits you better. A split loan gives you a bit of both. A broker can run the numbers for your specific situation and help you decide.
No commitment, no paperwork. Just a conversation about where you're at and what your options look like.