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Fixed Rate Loan

A fixed rate loan in simple terms is a loan where the interest rate is fixed for part of the loan term, known as the fixed rate period.

Fixed rate loans have, in the past, been associated with having firm conditions, such as limits to the extra repayments you can make.

However, with the introduction of relatively low interest rates and flexible new products, fixed rate loans have become quite popular across Australia, although not as popular as standard variable rate loans and professional packages.

The majority of home loans that are under a fixed rate do not allow extra repayments or include redraw facilities, however there are some exceptions.

Which lenders offer fixed rate loans?

The fees and interest rates that can be offered for a fixed rate loan will vary across all lenders, however all the major banks offer similar features for their fixed loans.

Some common fixed rate loan products are:

  • CBA MAV package fixed rate / Fixed rate loan
  • Rams- Fixed rate pro pack / Fixed rate
  • Westpac- Premier advantage fixed options home loan / Fixed rate interest in advance investment loan / Premier advantage fixed rate investment loan
  • St George- Advantage home loan package fixed rate loan / fixed rate home loan / Advantage home loan package introductory 1 year fixed rate loan
  • Suncorp- Money manager fixed rate / fixed rate home loan
  • ANZ Fixed rate interest in advance loan / Fixed rate home loan
  • NAB Choice package 2 years fixed / Choice package 3 years fixed / Choice package 4 years fixed / Choice package 5 years fixed / Choice package 10 years fixed / Tailored home loan / 12 months intro fixed
  • And many more.

What should I know about fixed rate loans?

Fixed rate loans can be good if you have the desire to carefully budget your repayments, which means, to know the exact amount of money you need for each repayment so that you can plan accordingly whilst at the same time it would give you a level of certainty and sense of security.

Yet you should keep in mind that many fixed rate home loans may still charge you for making early repayments. This means that if you make extra repayments then you will have to either keep the loan for the original term and pay the full interest amount or pay a fee.

We have a full article on what you need to know before you fix your rate which you may find useful.

What should the term of a fixed rate loan be?

With a fixed rate loan, you will need to carefully consider the loan term. It is usually between one and five years, three years being the most popular, however it can sometimes reach up to ten or even fifteen years with some lenders.

The loan term of three years has grown to become a popular choice as it allows the borrowers to engage in a sense of security with flexibility while still being priced quite competitively.

It is important to keep in mind that the decision of a loan term needs to suit your specific situation.

Read more on our fixed rate loans section to find out how you can get the best fixed rate and which lender can offer this to you.

How do I apply for a fixed rate home loan?

Please enquire online or call us on 1300 889 743 if you would like to talk with a mortgage broker who can give you expert advice on a fixed rate home loan, rate lock and flexible fixed loans.

  • Harley

    Hello. Is “rate lock” the same as getting a fixed interest rate or is it something different altogether?

  • Hey Harley,

    If you apply for a fixed rate home loan at a certain interest rate, you may actually receive a higher rate by the time you get your loan. This is because fixed rates are liable to bank changes in between the time you apply to the time your loan is advanced. Rate lock is an additional feature that will let you lock in the initial rate to protect it from any rate rises. The fee for this usually ranges from $395 to $695 but it can definitely be worth it if you’re considering to enter into a long-term contract with a lender.