One of the first decisions you'll face when taking out a home loan is whether to go variable or fixed. Both have genuine advantages — and the right choice depends on your financial situation, risk tolerance, and what you expect rates to do.
Here's everything you need to know to make an informed call.
A variable rate loan moves up or down with the market — specifically, it tends to follow RBA (Reserve Bank of Australia) cash rate decisions. When the RBA cuts rates, your repayments usually drop. When it raises them, your repayments go up.
A fixed rate loan locks your interest rate for a set period — typically 1, 2, 3, or 5 years. During that time, your repayments stay exactly the same regardless of what the RBA does. At the end of the fixed period, the loan automatically rolls to the lender's variable rate.
Fixed rates come with significant restrictions that many borrowers don't realise until it's too late:
⚠️ Watch out: Break costs on fixed loans can be enormous if rates have dropped since you fixed. Always get a written break cost estimate before exiting a fixed loan.
Many Australians choose a split loan — fixing part of the loan (say, 70%) for certainty, while keeping the rest variable to maintain flexibility and use an offset account. This is a popular middle ground and worth discussing with a broker.
This depends on your view on rates — and nobody can predict them reliably. What we can say is that historically, variable rate borrowers have paid less interest over the long run than fixed rate borrowers, simply because fixed rates bake in a risk premium for the lender. But fixed rates offer genuine peace of mind if your budget is tight.
The most important thing isn't which rate type you choose — it's which lender you go with. A lower variable rate beats a higher fixed rate every time, and the difference between lenders can be 0.5–1% on the same loan type.
See current indicative variable and fixed rates side by side — free, no sign-up. Then talk to a broker to get your actual rate.
Yes, but you'll likely pay break costs. The amount depends on the remaining fixed term and how much rates have moved. Always get a break cost estimate from your lender first.
Your loan automatically reverts to the lender's standard variable rate, which is often higher than the best rates available. This is a great time to refinance — talk to a broker about 3 months before your fixed period ends.
Not really — it's just one loan with two portions. Your lender manages both under the same account. The main consideration is deciding the split ratio and which portion gets the offset account (always the variable portion).