One of the first big decisions you’ll make when taking out a home loan is whether to go fixed, variable, or a mix of both. It’s a common question, so let’s break down what each option really means for you day to day.
Fixed rate home loans
A fixed rate locks in for an agreed period, usually one to five years, no matter what happens in the broader market during that time. That means your repayments stay predictable, which a lot of people find reassuring when budgeting. The catch is a bit less flexibility: many fixed loans cap your extra repayments and can charge break costs if you refinance or pay the loan out early.
Variable rate home loans
A variable rate can move up or down over time, following the lender’s pricing and the broader market. In exchange for less certainty, you usually get more flexibility, like unlimited extra repayments and often an offset account that can meaningfully reduce the interest you pay.
Splitting your loan
You don’t have to pick just one. Plenty of borrowers split their loan, fixing part of it for peace of mind and leaving the rest variable for flexibility. The right split really depends on how stable your income is, how much risk you’re comfortable with, and how long you’re planning to stay put.
So which one is right for you?
Honestly, there’s no one-size-fits-all answer here — it comes down to your own circumstances and what you value more, certainty or flexibility. If you’d like a hand comparing how different lenders structure their fixed, variable and split loans, that’s exactly the kind of thing we help with every day. Reach out anytime, or have a read of our guide on what first-home buyers should know before applying for a mortgage.