Fixed or variable? Let’s find the right fit for you.

Understanding the difference between fixed and variable interest rates can save you money and help you plan with confidence. We’ll walk you through the pros and cons — and help you decide what suits your goals.

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Understanding rate types

Choosing between a fixed and variable home loan rate comes down to what matters most to you — certainty or flexibility.

Fixed rate loans

A fixed rate loan means your interest rate is locked in for a set period (usually 1–5 years). Your repayments stay the same during this time, giving you stability and protection against rising rates.

Benefits:
• Predictable repayments — easier for budgeting.
• Shielded from interest rate increases.
• Peace of mind if rates are rising.

Things to consider:
• Limited ability to make extra repayments.
• Break costs may apply if you refinance or pay out the loan early.
• Fewer features (e.g. offset may not be available).

Variable rate loans

A variable rate loan means your interest rate can change over time — up or down — based on the market and lender decisions. This option offers more flexibility and typically more features.

Benefits:
• Freedom to make unlimited extra repayments.
• Access to features like offset and redraw.
• Easier to refinance if a better deal comes up.

Things to consider:
• Repayments can increase if rates rise.
• Less certainty for long-term planning.
• Budgeting may require more flexibility.

Split Loans: A balanced approach

A split loan gives you the best of both worlds — by dividing your loan into two (or more) portions, each with a different interest rate type.

For example, you might fix 60% of your loan to lock in a stable repayment amount, while keeping the remaining 40% variable so you can make extra repayments or use features like offset.

It’s a great option if you:
• Want some repayment certainty but don’t want to miss out on flexibility.
• Are unsure where interest rates are headed.
• Like the idea of stability + features in one loan.
• Plan to make extra repayments but still want rate protection.