When you look into getting a home loan in Australia, you are generally offered one of three options:
- Fixed-rate loan
- Variable-rate loan
- Split loan
A fixed-rate loan is where your interest rate is locked for a set period of time, generally from 1-5 years. This means, unlike with a variable-rate loan, your repayments will stay the same for that set period, no matter what happens with interest rates in the market.
Get A Competitive Deal
The table below lists the most competitive fixed rates currently available in the Australian market.
|Fixed Loan Term||Interest Rate||Comparison Rate*||Contact Us|
|1 year fixed||5.99%||6.59%||Apply Now|
|2 year fixed||5.99%||7.76%||Apply Now|
|3 years fixed||5.99%||7.59%||Apply Now|
|4 years fixed||6.09%||7.48%||Apply Now|
|5 years fixed||5.99%||6.36%||Apply Now|
|10 years fixed||7.49%||7.52%||Apply Now|
|Interest in advance||6.14%||7.93%||Apply Now|
Unlike variable loans, fixed-rate loans need to be carefully chosen because you are committed to that lender for the period. There are three secrets to making sure you get a great deal on a fixed-rate loan:
1. Know When To Fix
Choosing the right loan is a great start but what is the point if you lock yourself in when rates are high, only to see the Reserve Bank cut interest rates?
By fixing when the economy is running smoothly and interest rates are cheap, you will protect yourself from credit crises and volatility.
Unfortunately, most Australians fix when rates are high because they fear that rates are going to go higher. Remember, three to five years is a very long time, so take time to make your final decision on the type of interest rate you want to go forward with.
2. Choose The Right Lender
Many people just go straight to their bank and try their best to negotiate a good rate. Unfortunately, this strategy is flawed because, unlike variable rates, the major banks and other lenders have completely different fixed rates.
Why is there so much variation? Because each lender has their own opinion about the likely direction of interest rates in the future and so they price their loans with different rates.
A mortgage broker can negotiate on your behalf to get a great offer from one of the lenders on their panel.
3. Should You Fix At All?
Of those who apply for a fixed-rate loan, many of them would be better off with a variable rate.
Why is it that some people are better off with variable rates?
A fixed loan is like a fixed contract: if you break it then it is going to cost you a small fortune.
Do not fix your interest rate if you plan to:
- Sell your property
- Make a large lump-sum repayment
- Refinance your home loan
Tip: Flexible fixed rates (splitting the loan so it is half fixed and half variable) may help if you are planning to make extra repayments but this will not help if you are selling or refinancing, as you would still incur large exit fees.
Our popular articles on fixed rate loans
Is locking in for three years worth your while?
When should I fix for five years?
Discounts are available but is there a benefit?
Our essential guide to fixing your loan.
Special offers from our panel of 30 Australian lenders.
How much can I repay without being charged?
Frequently Asked Questions
The break cost is designed to compensate the lender for loss of interest, and can sometimes be quite high. You can use our break cost calculator to get an estimate of what you may be charged if you pay off your home loan early.
The truth is that nobody knows what will happen with interest rates in the future, not even the Reserve Bank.
In the past, we have seen many predictions on interest rates that have turned out to be incorrect.
If you choose to fix your interest rate, then please base your decision on sound economic logic or on your own personal preferences, not media reports. Read only the official predictions released by the big four banks or government sites.
Always keep in mind that if you fix your home loan and then interest rates drop, you cannot switch back to a variable rate without paying a large exit fee.
New Flexible Fixed Rates
Traditionally, fixed-rate loans lack the flexibility other home loan products offer. However, with new products coming out in the market, some fixed-rate loans now offer features including:
- Extra payments without penalty
- Redraw facilities
- 100% offset facilities
- Low or no monthly account keeping fees
- Interest only repayments
Interest-In-Advance Home Loan
Want to get some great tax deductions this financial year? Pre-pay your interest by signing up for an interest-in-advance home loan. We know lenders that have the most competitive interest rates and can offer you professional discounts as well.
This option is particularly suitable for property investors and those refinancing.
Find The Cheapest Fixed Rate Loan
Our mortgage brokers have specialised software that can quickly find and compare the cheapest fixed-rate home loans.
Please call us on 1300 889 743 or enquire online and we will complete a needs analysis, work out which lenders you qualify with and give you several options to choose from.