Different types of home loans and how they work
The home loan market can be a complex beast, so it pays to understand the various types of...
10 Apr, 2025
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Row Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.69% p.a. | 5.95% p.a. | $2,899 | Principal & Interest | Fixed | $0 | $530 | 90% |
| Promoted | Disclosure | |||||||||||
5.70% p.a. | 5.76% p.a. | $2,902 | Principal & Interest | Fixed | $0 | $500 | 95% | ||||||||||||||
5.69% p.a. | 6.20% p.a. | $2,899 | Principal & Interest | Fixed | $15 | $784 | 80% | ||||||||||||||
5.75% p.a. | 5.75% p.a. | $2,918 | Principal & Interest | Fixed | $0 | $0 | 90% | ||||||||||||||
5.79% p.a. | 6.11% p.a. | $2,931 | Principal & Interest | Fixed | $250 | $250 | 80% | ||||||||||||||
5.84% p.a. | 6.32% p.a. | $2,947 | Principal & Interest | Fixed | $350 | $210 | 95% | ||||||||||||||
5.49% p.a. | 6.10% p.a. | $2,836 | Principal & Interest | Fixed | $248 | $350 | 70% | ||||||||||||||
5.69% p.a. | 7.57% p.a. | $2,899 | Principal & Interest | Fixed | $395 | $180 | 95% | ||||||||||||||
5.94% p.a. | 6.06% p.a. | $2,978 | Principal & Interest | Fixed | $0 | $350 | 90% | ||||||||||||||
5.89% p.a. | 6.32% p.a. | $2,962 | Principal & Interest | Fixed | $375 | $0 | 80% | ||||||||||||||
5.89% p.a. | 7.89% p.a. | $2,962 | Principal & Interest | Fixed | $8 | $600 | 95% | ||||||||||||||
5.54% p.a. | 6.59% p.a. | $2,852 | Principal & Interest | Fixed | $8 | $350 | 90% | ||||||||||||||
6.34% p.a. | 6.88% p.a. | $3,108 | Principal & Interest | Fixed | $null | $160 | 95% | ||||||||||||||
5.99% p.a. | 8.41% p.a. | $2,995 | Principal & Interest | Fixed | $8 | $700 | 95% |
Important Information and Comparison Rate Warning
Important Information and Comparison Rate Warning
What is a fixed rate home loan?
A fixed rate home loan features an interest rate that remains constant for a specified period, typically between one and five years.
This ensures your repayments stay the same throughout this period, unlike variable rate home loans, where interest rates - and thus repayments - can change at any time.
Should you fix your home loan interest rate?
If you answer 'yes' to any of these questions, you might be a prime candidate for a fixed rate home loan:
-
Would you struggle to meet repayments if your rate were to rise?
Since the interest rate on a fixed rate mortgage won't budge, they can be ideal for those who don't have much wiggle room in their budgets or those who wouldn't be able to meet their repayments if they were to increase. -
Do you loathe uncertainty?
A fixed rate might also be suitable for a person who doesn't like to take risks. -
Do you prefer to make detailed financial plans for the years to come?
A fixed rate home loan might also suit a person who likes to make financial plans ahead of time and down to the dollar. -
Do you really, truly believe that interest rates are about to take off?
Fixed rate home loans offer protection against rate hikes. Though, a fixed rate borrower won't benefit if rates were cut.
When might a fixed rate mortgage not be the best choice?
On the other hand, if you plan to make many extra repayments, hope to refinance sooner rather than later, or are expecting interest rates to fall in the near future, a variable rate mortgage might be more your cup of tea.
Fixed rate home loans typically limit the amount of extra repayments a borrower can make and refinancing from a fixed rate can be costly.
What's the best fixed rate home loan on the market now?
If you're hunting for the most competitive fixed rate home loan available right now, you've come to the right place!
Your Mortgage brings together fixed rate home loans from dozens of lenders, allowing you to compare mortgages from all corners of the market at the click of a button.
If you have an idea of how long a fixed rate period you're after, simply use the filters provided to sort through many of the lowest rates on offer for your needs. Or, if you're less certain, browse the market's entirety by scrolling through the table above.
Why do different fixed periods offer different interest rates?
Looking through all the mortgages on the table above, you might notice that some fixed rate periods offer notably more competitive rates than others.
Lenders set fixed rates based on their predictions of future interest rate movements.
Higher rates for longer terms may reflect expectations of rising future rates, while lower rates could be a sign lenders anticipate rate drops.
Benefits and drawbacks of fixed rate home loans
There are many things to consider before deciding to take out a fixed rate home loan. Here are a few of the advantages and disadvantages of fixed mortgage rates:
Pros of a fixed rate home loan
Stability
A fixed home loan can offer more stability than a variable home loan as your repayments won't change during the fixed loan period, making it easier to budget for other things.
Protection from rate hikes
Fixing your mortgage interest rate also means you'll be protected from any rate hikes during the fixed rate period. However, if variable rates drop during the fixed period, you could end up paying more than the average punter.
Cons of fixed rate home loans
Less flexibility
However, fixed rate home loans can be less flexible than variable home loans, which generally have more home loan features like an offset account or redraw facility.
If you were to refinance your home loan or sell your property during the fixed period, you might incur significant break costs.
No rate cuts
Of course, one of the major benefits that fixed rate home loans offer - protection from rate hikes - can be a double-edged sword.
Borrowers taking out a fixed rate mortgage won't benefit if interest rates were to be cut during their fixed rate period.
How to compare fixed home loans
So, you've decided a fixed rate home loan is the right type of mortgage for you. Now it's time to find the best fixed rate home loan product for your needs.
At this point, it's vital that you do your research and make sure you compare all your options. Here's what to look for when doing so:
Interest rate
It might sound obvious, but the interest rate is often the first piece of information you'll learn about a home loan.
Take some time to scan the market and find what a good, not so good, and bad interest rate is at the time you're looking for a mortgage. This is a simple way to narrow down your options and ensure you get a good deal.
Comparison rate
Perhaps more important than the headline interest rate, however, is the accompanying comparison rate.
The comparison rate essentially outlines the 'true cost' of the loan, including upfront fees, ongoing costs, and the revert rate (which we'll get to in a moment).
It's based on how much a product would cost a person taking out a $150,000 loan term over a 25 year period.
Revert rate
The revert rate is the interest rate the home loan will 'revert' to once the fixed term period expires.
Don't make the mistake of assuming the lender will automatically provide you with their lowest variable rate on the expiry of your fixed rate period. It's more likely that your interest rate will revert back to the lender's standard variable rate, which can be a lot higher than its lowest variable rate.
If that rate is far from competitive, it might be worth factoring in the cost of either meeting that new rate or refinancing when your fixed rate period ends.
Fees
Home loan fees, such as monthly fees, redraw fees, or annual fees can add up.
When comparing one fixed home loan against another, it's worth considering any ongoing and upfront fees. Not to mention, any costly break fees if you expect you might wish to refinance.
Features
If it's important that your home loan has features like a redraw facility or an offset account, you should narrow your search down to products that offer them.
However, be warned that fixed rate home loans don't typically offer the same breadth of features that their variable rate counterparts do.
Additionally, most lenders impose limits on the amount of extra repayments a fixed rate borrower can make without incurring penalties, often capping it at around $10,000 per year.
If having a home loan packed with features is something that's really important to you, a fixed home loan may not be suitable.
Exploring the Benefits of Fixed Rate Home Loans
Delve into the world of fixed rate home loans and learn how they can benefit you. Learn about the stability and predictability they offer, and the crucial factors to consider before opting for a fixed rate. Explore the concept of split home loans and understand when they can be advantageous for your financial situation.
Managing Fixed Rate Home Loans: Transition and Refinancing Strategies
As your fixed rate term approaches its end, it's essential to have a plan in place. Gain insights into what to do when your fixed rate term expires, including refinancing options and strategies. Discover expert tips for navigating the refinancing process as a fixed rate borrower and learn about potential strategies to minimise or avoid break fees associated with fixed rate loans.
Frequently Asked Questions
If you want to end your fixed loan contract early, perhaps you want to switch loans or lenders, you’ll probably have to pay a break cost. This can be expensive and shouldn’t be considered lightly.
If you pay off a fixed home loan before the end of the fixed term, you might have to pay a costly break or discharge fee.
The size of these fees are generally dependant on the size of your home loan and how long is left on your fixed rate period. They can often amount to thousands, if not tens of thousands, of dollars.
If you plan to pay off your mortgage early, a fixed rate home loan may not be suitable for you.
Some fixed home loans may allow you to make extra repayments, but these extra repayments are usually capped by the lender.
If you make repayments above and beyond this amount, your lender may penalise you.
Whether fixed rates are higher than variable rates, or vice versa, typically depends on the economic climate at any given time and lenders' expectations for the future.
Generally, if fixed rates are lower than variable rates, it’s a pretty good sign that lenders expect rates to remain low for some time. While, if fixed rates are higher than variable rates, it could insinuate that lenders think rates will rise soon enough.
Most fixed rate home loans offer fixed periods of between one and five years.
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