Choosing between fixed and variable is not a rate forecast. It is a choice about certainty and flexibility.
A fixed rate stays the same for a set term, usually one to five years; a variable rate can change whenever the lender moves it. A split gives some of each.
Fix if certain repayments matter more than flexibility; stay variable if you want an offset, unlimited extra repayments or might sell or refinance. Fixed loans can carry break costs if rates fall and you leave early, so the decision rests on your plans, not on where rates go.
Part of the refinancing guide.
Exit a fixed loan early, refinance, sell, pay it out, and the lender may charge a break cost reflecting the difference between your fixed rate and current market rates for the remaining term.
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Charles went above and beyond to help us secure our home loan. He worked hard to find the best option for us and kept us updated throughout the whole process. His knowledge of the lending market was impressive and he made everything straightforward.
Highly recommend Charles! Professional, knowledgeable and very easy to work with. He helped us navigate the home loan process and found a great solution that suited our needs. Excellent service from start to finish.
Charles and the team recently assisted me with the refinance of my investment property.
| Fixed | Variable | Split | |
|---|---|---|---|
| Your rate | Locked for the term | Moves with the market | Part locked, part moving |
| Repayment certainty | Total, for the term | None promised | On the fixed portion |
| Extra repayments | Usually capped per year | Usually unrestricted | Unrestricted on the variable side |
| Offset and redraw | Often limited or absent | Commonly full-featured | On the variable portion |
| If rates fall | You stay where you locked | You follow them down | Half and half |
| Leaving early | Break costs can apply | Usually free to move | Break costs on the fixed portion |
Charles Touma, Mortgage Broker.
Three things decide whether a fixed loan fits: the cap on extra repayments, often a few thousand dollars a year; whether it has an offset, which many fixed loans lack; and the revert rate when the term ends, often uncompetitive.
Exit a fixed loan early, refinance, sell, pay it out, and the lender may charge a break cost reflecting the difference between your fixed rate and current market rates for the remaining term.
When rates have fallen since you fixed, break costs can run to thousands. This is the quiet risk in long fixed terms: life changes on its own schedule.
If a sale, separation, renovation or move is plausible inside the term, that possibility belongs in the decision now, not in a shocked phone call later.
A split doesn't require you to be right. Fix the portion of the repayment you need to be certain about; leave the rest variable with full offset and unlimited extra repayments.
The proportion is yours, and it can reflect your actual plans: savings sitting against the variable side working every day, certainty holding the fixed side steady. For many borrowers this is less a compromise than the correct answer to two different needs.
Buys certainty. The price is flexibility.
Buys flexibility. The price is certainty.
Certainty where you need it, flexibility where you don't.
Features vary by lender and product, the specifics are confirmed before anything is recommended.
When the repayment must not move: tight budget after purchase, one income, known expenses coming. Fix for the period the pressure lasts, not the longest term offered.
Whatever the structure, price it: run the repayments calculator on the scenarios, and if you're comparing against your existing loan, the refinancing guide covers when switching beats staying. A rate-lock at application can hold a fixed rate while your loan settles, worth asking about in a moving market, and we do.
Nobody can answer that from the market's side, rate forecasts are guesses, including the confident ones.
It can be answered from your side: how much repayment certainty your budget needs, how likely you are to sell or refinance inside the term, and how much flexibility you'd be giving up. That conversation takes about thirty minutes and produces a structure, not a prediction.
As long as you need certainty, and no longer: a shorter term suits a maternity leave or the first tight years after purchase, and break-cost exposure grows with the years remaining.
Usually only up to an annual cap, which varies by lender; beyond it, break costs can apply. If paying ahead hard is part of your plan, that plan belongs on the variable side of a split, where extra repayments are unlimited.
The loan rolls to the lender's revert rate, typically less competitive than what new customers are offered. Treat the expiry as an appointment: re-fix, restructure or refinance deliberately.
We diarise our clients' fixed-term expiries and call before the roll, because the lender's reminder letter is not written to save you money.
Generally no, a split is one loan with two portions, and most lenders don't charge extra for the structure itself. You'll see each portion's rate applied to its balance, and features like offset attach to the variable portion. The proportions can usually be set to the dollar.
Thirty minutes with Charles: your certainty needs, your flexibility needs, and the fixed, variable or split structure that serves both, priced across 70+ lenders.
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General information only, not credit or financial advice. Rates, features, caps and break-cost methods vary by lender and product and change over time; nothing here predicts interest rate movements. Your structure is recommended only after a full assessment of your circumstances.
