When deciding whether to fix your rate or use a variable loan, the best choice depends on your budget, flexibility needs and comfort with changing repayments.
Fixed rate loans explained
A fixed loan locks your rate for a set period (often 1–5 years). Your repayments don’t change, making budgeting easier. The trade-off is flexibility — you can’t usually make unlimited extra repayments or refinance without break fees.
Variable rate loans explained
A variable rate moves with the market. If the RBA cuts rates, your repayments may fall. But if rates rise, they increase too. Variable loans can include offset accounts and extra repayment features, depending on the product.
Quick repayment comparison
Use this simple tool to compare monthly repayments between a fixed and variable rate for the same loan amount. Results update instantly.
Example: comparing two loan options
Emma has a $500,000 home loan with 25 years remaining. Her lender offers her a 6.10% fixed rate for three years, or a 6.60% variable. If she stays variable and rates rise another 0.25%, her repayments climb by around $80 a month. By fixing, she trades flexibility for certainty — knowing her payments won’t move until 2028.
How to decide
- Choose fixed if stability matters and you expect rates to rise.
- Choose variable if flexibility, offset features, or paying off faster are priorities.
- Some borrowers split their loan — half fixed, half variable — for balance.
Want to explore further? Use our full Repayment Estimator or see how RBA rate changes could shift your repayments before deciding.