INTEREST RATES · EAST MONEY GUIDE
Fixed vs variable home loans: choosing the fit
The decision is about certainty, flexibility and what could change during the next few years. No rate type is automatically best for every borrower or every market.
East Money · General information
Fixed rates create a defined period of certainty
A fixed rate generally keeps the applicable rate and required repayments stable for the chosen fixed period. This can help budgeting, but the fixed term eventually ends.
Variable rates can move and often offer flexibility
A variable rate may rise or fall when the lender changes it. Variable products commonly offer broader access to extra repayments, offset or redraw, although features vary.
Restrictions and break costs matter
Fixed loans may limit extra repayments and can involve break costs if repaid or refinanced early. Ask what happens if you sell, refinance or receive a lump sum during the period.
- Length of the fixed period
- Extra-repayment allowance
- Offset or redraw availability
- Potential break costs and end-of-term process
A split loan can combine both
Dividing a loan between fixed and variable portions can provide some repayment certainty while keeping some flexibility. Each portion should have a deliberate purpose.
Choose around your plans, not a prediction
Consider income stability, cash buffers, planned sale or refinance and the value of repayment certainty. Trying to forecast the exact path of rates is less useful than testing both outcomes.
QUESTIONS PEOPLE OFTEN ASK
Useful points to clarify early.
Can I fix only part of the loan?
Many lenders allow a split, subject to product and application rules.
What happens when a fixed rate ends?
The loan generally moves to the lender’s applicable variable rate unless you arrange another option. Review it before the expiry date.
Will a fixed rate always save money if rates rise?
Not necessarily. The result depends on pricing, timing, fees, restrictions and what happens after the fixed period.
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