Australian home loans usually run for 30 years, but the rate is fixed for only part of that time, most often one to five years.
Not in the American sense. Australian lenders fix rates for one to five years, sometimes up to ten, and the 30 years is the loan term.
The nearest things are a longer fixed term with one of the few lenders that offer it, or rolling one fixed period into another, each with break costs if you leave early.
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Charles and the team at links property finance recently assisted me with my purchase of my first property in Burwood. As a first home buyer, Charles made the process simple and easy. I would recommend Charles to all first home buyers
Charles is an absolute star at what he does. He was straight-up, highly professional, and worked hard to secure a fantastic rate for our home loan. Communication was prompt and clear the entire way through. I would trust him with any future financial needs
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You do not have to choose all fixed or all variable. A split loan fixes part of the balance and leaves the rest variable. The right ratio depends on how much flexibility you need over the next few years.
The fixed part gives repayment certainty, and the variable part keeps an offset account, extra repayments and the freedom to refinance without a large break cost.
Nobody can reliably time interest rates, including lenders. A better question is what you need from the next few years: certainty for a tight budget, or flexibility for extra repayments, a sale or a refinance.
Compare the fixed rate with the variable rate you could get today, not the one you are on, and check the limits on extra repayments and offset during the fixed term. Our guide to fixed and variable loans covers the trade-offs in more depth.
Four things that decide whether a fixed rate suits you.
Not as a mainstream product. Australian lenders generally fix for one to five years. The loan itself usually runs for 30 years, so the rate is reset or reverts to variable several times over its life.
Most lenders offer fixed terms of up to five years, and a handful have offered longer terms at times. Longer fixed periods tend to cost more and carry tighter limits, so they are worth comparing carefully against a shorter fix.
They are recalculated at the new rate, usually the lender’s revert variable rate. If that rate is higher, the repayment rises. Reviewing the loan a few months before the end gives you time to fix again, move to a sharper variable rate or refinance.
Usually only up to a yearly limit set by the lender. Paying more than that, or paying the loan out early, can trigger a break cost. A variable split alongside the fixed part is the usual way to keep that flexibility.
It depends on what matters more to you: knowing the repayment for the next few years, or keeping offset, extra repayments and the freedom to refinance. Charles models both on your numbers, along with a split, before you decide.
Coming to the end of a fixed term? Our guide to when your fixed rate ends sets out what to do and when.
Charles can compare fixed, variable and split options on your loan, including what happens to the repayment when a fixed period ends.
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General information only, not credit or financial advice. Fixed rate terms, break costs and conditions vary by lender and change over time. Rates and repayments are confirmed in an assessment.
