Fixed vs. Variable Rate?

So, you’ve decided to buy a property. How exciting! Understanding the world of home loans may be confusing like what the difference is between a fixed and variable interest rate home loan.

Both home loans setups offer unique advantages and what is better will depend on your situation + objectives.

Here are some of the key factors to consider when working out which type of home loan is right for you.


What is a fixed rate home loan?

A fixed rate home loan is where the interest rate is locked in or ‘set’ for a period of time, otherwise known as the fixed term of the loan. This means that the interest rate you pay will remain the same over that course of time.


Pros of a fixed rate home loan:

A major benefit of a fixed rate home loan is certainty. You’ll know exactly what your repayments to expect and at what level of interest for a certain period. Typically, this is between 1 and 5 years.

Key points:

  • Protect yourself against interest rate rises
  • Lock in your interest rate so you know what your repayments will be
  • Plan and set financial goals with ease


Cons of a fixed rate home loan:

A fixed rate home loan is not as flexible as a home loan with a variable rate. This may be worth considering if you expect your financial situation could potentially change in the future.

Key points:

  • Rate cuts won’t benefit you
  • Limits a borrower’s ability to pay off their loan faster by restricting extra repayments or capping them at a certain amount per year
  • Break costs may be charged if you repay your loan early or refinance during a fixed rate period
  • Redrawing funds is not available on a fixed rate home loan


What is a variable rate home loan?

A variable rate home loan is a loan with an interest rate that may change over time. If you choose this type, you may be able to take advantage of any interest rate decreases over your loan’s term. 


Pros of a variable rate home loan:

Variable rate home loans tend to offer more flexibility and include more features.

Key points:

  • If rates fall and you’re on a variable rate, this means you’ll reap the benefits of lower interest and repayments
  • Allows for a wider range of repayment options, including the ability to pay off your loan faster without incurring interest rate break costs
  • If you wish to refinance, it’s easier to switch to a different lender or home loan product if you’re on a variable rate, without attracting break costs


Cons of a variable rate home loan:

If interest rates go up, your repayments could increase.

Key points:

  • Lenders can change a variable interest rate at any time generally according to the market. For borrowers, this means their rate is likely to fluctuate over the life of their loan. If your bank raises rates, your repayments will rise
  • It can be harder to budget for the future as you can’t be sure how interest rates might move


Split Rate Home Loans

Can’t decide? A good option can be to split the loan. If you’re indecisive on whether to go with a fixed or variable home loan, there is an option to split your loan between the two. If you split your home loan, it means that you can designate a certain portion to a variable home loan, and the rest to a fixed home loan. This means you have the certainty of a fixed rate on part of your loan as well as the flexibility to make extra repayments on the variable rate part of your loan.



Want to find out more about your home loan options? Get in touch with our team today.

Can gambling impact your home loan application?

July 10, 2025
If you’re looking to buy a property, it’s important to remember that your gambling habits could be taken into account when you apply for a home loan. Your lender will look at any track record of gambling when assessing your financial situation and ability to repay the mortgage. Not only could gambling jeopardise your chances of being approved for a loan, but it could also impact your ability to refinance down the track. Understanding the process When you apply for a home loan, your lender will do an affordability assessment. As part of this, they’ll assess your income (from all sources) against your outgoings (your regular expenses). They’ll also likely check your credit score. If a lender sees evidence of regular gambling transactions as part of your expenses, it may be a red flag. They’ll look at how much money you’re gambling, how frequently you’re betting and what type of gambling you’re participating in. If it’s a small amount you’re gambling relatively infrequently for leisure, it probably won’t raise any alarm bells with the lender. The occasional Powerball ticket, for example, will be considered harmless. However, if it’s an ongoing habit that’s getting out of control, it could limit your ability to secure finance. How to turn things around There are steps you can take to try to maximise your chances of getting approved for a home loan if you do have a history of gambling. Domino your debts: Paying off your debts – whether it be credit card debt, car loan or personal loans – is a good place to start, as it shows you are able to manage your finances effectively. Budget and save: A strong track record of saving will go down well with lenders. Keep putting money aside regularly and grow your savings nest egg. Boost your credit score: You can access your credit score and credit report for free every few months. If you notice any errors in the report, contact the credit provider. The government’s moneysmart website offers tips on how to improve your credit score, such as lowering your credit card limit, paying your utility bills on time and keeping on top of credit card repayments. Stop gambling: If you think your gambling may jeopardise your home loan application, try to reduce or quit gambling. Seeking help There are many resources available to help you tackle a gambling addiction. GambleAware offers tools and support for those who are looking to stop gambling. The site includes a gambling assessment to see how the habit may be impacting your life, as well as research and links to gambling support groups. You can also get immediate support from Gambling Help Online on 1800 858 858. It’s free and confidential. Other options can be found on the Health Direct website . Like to talk through your finance options? If you’d like to know more about how your gambling habit may affect your home loan application, we’re here to answer your questions. Talk to us confidentially about your financial situation and we’ll help you work towards getting the finance you need.

Are you retirement ready? Planning for the next chapter

By Darcey Rizzuto • May 30, 2025
Retirement often conjures up images of afternoons on a golf course or adventures in a motorhome, of growing your own vegetables or spending quality time with the grandkids.