Compare Fixed Rate Home Loans from 3.47%

Most lenders will offer the ability to have both fixed and variable rates through a ‘split’ loan option. With a split rate home loan, you essentially split your home loan balance into two different accounts, at different portions – one being charged a fixed interest rate and one charged a variable rate. In a low interest rate environment, having more of your loan as a variable-rate means you could potentially reap the rewards of falling interest rates and repayment flexibility, while fixing a greater portion of the loan could be more beneficial if interest rates were to rise. 

Generally, major lenders will offer the option to fix your home loan for up to five years. Further, some lenders offer ten-year fixed home loans on the Australian market - Savings.com.au’s market research identified two at the time of writing - Newcastle Permanent and ANZ.

If you repay your fixed rate home loan before the end of the fixed term, you will have to pay a break fee which may cost thousands. Other admin fees may also apply. If you want the freedom to repay your home loan early, a fixed rate home loan may not be the best option for you.

A variable rate home loan, on the other hand, is a home loan where your interest rate will move along with changes to the market. So if you have a home loan with a variable rate of 2.50% p.a. interest rate, and your lender decides to drop rates by 25 basis points, your home loan rate should now be 2.25% p.a.

Although variable rate home loans have a higher degree of uncertainty than fixed loans, they can be cheaper for you, particularly in times where rates are regularly falling. They also tend to have appealing features like the ability to make extra repayments, offset accounts and redraw facilities, which most fixed loans don’t allow. 

See our article on fixed vs variable rates to learn more about which one you should choose, and see what interest rates are currently to give you an idea of whether they might rise or fall. 

A fixed interest rate, as the name might suggest, fixes the interest rate you pay in place for the duration of the term specified. For example, a three-year fixed interest rate at 2.50% p.a. will stay at that 2.50% p.a. rate for three years regardless of economic pressures or the lender’s needs, before reverting to a standard variable rate. 

Cash flow certainty is arguably the biggest advantage of a fixed-rate loan. Your repayments staying the same for a known period of time can make it much easier to budget, as you know exactly how much your repayments will be. This often makes fixed-rate home loans popular for investors and sfirst-time buyers over the first two-three years that they own a property for.

Of course, this can also be a disadvantage if interest rates drop. The locked nature of a fixed rate home loan means any reductions in a lender’s interest rates for any reason (such as recent changes to the cash rate) won’t be passed on to you, which can cause you to lose out on hundreds if not thousands of dollars. Also the variable rate the loan will revert to at the end of the fixed-rate period (known as the revert rate) can be significantly higher than some of the lower variable rates on offer, so you may want to consider refinancing to a different loan around this time.