Fixed vs Variable Home Loan — Which Is Right for You?

Fixed rate home loans

A fixed rate loan locks in your interest rate for an agreed period — typically 1, 2, 3 or 5 years. Repayments stay the same regardless of Reserve Bank decisions. At term end, your loan reverts to the lender's variable rate. Fixed loans typically restrict extra repayments and rarely include offset accounts. Exiting a fixed loan early can incur significant break costs — always check before acting.

Variable rate home loans

A variable rate loan moves with the lender's standard variable rate, which can change when the RBA adjusts the cash rate or when lenders decide to move independently. Variable loans typically offer more flexibility: unlimited extra repayments, offset accounts, redraw, and easier refinancing. Repayments can go up or down over the loan life.

Split loans

A split loan divides your borrowing between fixed and variable portions — for example, 60% fixed and 40% variable. This provides partial payment certainty while retaining some variable features. The split ratio can usually be set to suit your preferences. Individual product terms vary by lender.

Key considerations

Consider: How important is repayment certainty? Do you plan to make extra repayments or use an offset? How long will you hold this loan? Do you plan to sell or refinance within the fixed period (break costs apply)? A mortgage broker can explain the trade-offs. General information only — not financial advice.

Rate is not the only factor

An offset account on a variable loan can save more in interest than a slightly lower fixed rate, depending on your savings balance. Comparison rate, fees, flexibility and features all matter. Your broker compares total cost across multiple lenders.

Frequently asked questions