Fixed vs Variable Interest Rates

Choosing between a fixed and variable interest rate can have a big impact on your repayments and cash flow, so it’s worth understanding the basics.

Fixed interest rate

Your rate and minimum repayments stay the same for a set period (for example, 1–5 years).

Pros:

• Certainty of repayments for easier budgeting
• Protection if interest rates rise

Cons:

• Less flexibility, with possible limits on extra repayments or redraw
• Break costs if you refinance or repay early
• You may miss out if rates fall

Variable interest rate

Your rate can move up or down with market and lender changes.

Pros:

• Usually more flexible, often with extra repayments, offset and redraw features
• Benefit quickly if rates fall

Cons:

• Repayments can increase if rates rise
• Harder to predict long-term costs

This is general information only, not personal advice. Always consider your own goals and speak with a qualified mortgage broker before deciding.