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Last Updated: 26th July, 2024

The table below lists the most competitive fixed rates available in the Australian market.

Fixed Loan Term Interest Rate Comparison Rate* Contact Us
1 year fixed 5.99% 8.30% Apply Now
2 year fixed 5.99% 8.06% Apply Now
3 years fixed 5.89% 6.49% Apply Now
4 years fixed 5.99% 7.66% Apply Now
5 years fixed 5.99% 7.48% Apply Now
10 years fixed 7.49% 8.09% Apply Now
Interest in advance 6.34% 6.94% Apply Now

Fixed-rate loans must be chosen particularly carefully because you are committed to that lender for the period or you’ll have to pay break costs. Let’s dive into everything you need to know about fixed-rate home loans, including their benefits, potential drawbacks, and how to decide if this type of loan is right for you.

What Is A Fixed-Rate Home Loan?

A fixed-rate home loan is a type of mortgage where the interest rate is locked in for a specified period, typically between 1 to 5 years, although some lenders offer terms of up to 10 years.

During this period, your repayments will stay the same for that set period, no matter what happens with interest rates in the market. Once this fixed period ends, you have the option to either refix your loan at the rates available at that time or switch to a standard variable rate.

Should I Choose A Fixed-rate home loan?

Choosing a fixed-rate home loan could be a good option if you value stability and predictability in your repayments.

Here are some factors to consider:

  • Stability: A fixed-rate loan provides the certainty of knowing exactly what your repayments will be for a set period.
  • Market Conditions: Some people choose a fixed rate if they expect interest rates to rise, as it allows them to lock in a current rate and potentially save in the long run.
  • Inflexibility: Fixed-rate loans can have less flexibility, often including penalties for early repayment or switching loans.

Ultimately, the choice depends on your financial situation and your comfort with potential changes in interest rates.

Pros And Cons Of Fixed-rate Home Loans

Pros of getting a fixed-rate home loan

  • Stability in Repayments
    • You are protected from interest-rate hikes during the fixed term. Your repayments will not change.
  • Financial Planning
    • Fixed repayments make it easier to budget and help with long-term financial planning. It’s easier to manage other financial commitments without worrying about changing loan repayments.
  • Certainty in Uncertain Times
    • Fluctuations can occur in the economy, a fixed-rate loan offers predictability.

Cons of getting a fixed-rate home loan

  • Limited Flexibility
    • Fixed-rate loans often come with restrictions, such as penalties for early repayment or switching loans. You might also miss out on potential savings if interest rates fall during the fixed period.
  • Higher Initial Rates
    • Fixed-rate loans can initially be higher than variable-rate loans, meaning you might pay more if interest rates stay the same or decrease.
  • Fewer Home Loan Features
    • Fixed-rate loans often come with fewer features, such as redraw facilities or offset accounts, limiting your options for managing the loan.
  • Re-evaluation at the End of the Term
    • When the fixed period ends, your loan typically changes to your revert rate – a variable rate determined by the lender – which might be higher. You will need to reassess your financial situation and possibly renegotiate your loan terms. Contact your mortgage broker immediately so they can reprice the rates and ensure you remain competitive.

Looking for Alternatives

If a fixed-rate home loan doesn’t seem like the right fit for you, there are other options to consider.

  • Variable-Rate Loans: These loans have interest rates that fluctuate with the market, which can lead to lower repayments when rates are down but higher repayments when rates rise. Variable-rate loans often offer more flexibility, too, including features like redraw facilities and offset accounts.
  • Split Loans: A split loan combines fixed and variable rates. For example, you could take out a $500,000 loan and split it into two portions: $300,000 with a fixed rate of 5.99% for three years and $200,000 with a variable rate of 6.20%. This way, you have the stability of fixed repayments on the larger portion, while the variable rate on the smaller portion allows you to benefit if interest rates decrease.

What Are the Fees and Charges?

While the specific fees and charges can vary among lenders, here are some common ones you might encounter when getting a fixed-rate home loan:

Upfront Fees

  • Application fee: A one-off charge for processing your loan application.
  • Valuation fee: Covers the cost of assessing the property’s value.
  • Establishment fee: Covers the lender’s costs in setting up the loan.
  • Rate lock fee: If you want to secure a specific interest rate during the loan application process, you need to pay this fee.

Ongoing Fees

  • Monthly account fee: A regular charge for maintaining the loan account.
  • Early repayment fee: If you pay off the loan early, you might incur this charge.

Closing Fees