Fixed rate home loans explained

Average customer rating: 4.3/5
Written by James Hurwood
Reviewed by Stephen Zeller
Updated March 07, 2024

Fixed rate home loans explained

Learn everything you need to know about fixed rate home loans with Selling Houses Australia host, Andrew Winter.

Farewell paperwork, it's Home Loan Heaven

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Why take out a fixed rate home loan?

For the right borrower, fixed home loan rates can offer:

  • Certainty and stability as you know the exact cost of your home loan repayments for a set period of time
  • Easier budgeting and cashflow management
  • Protection against interest rate rises
  • Lower feature costs

Choosing a fixed rate home loan

Here are a few things you should look out for when comparing fixed rate home loans:

  • Interest rates. Don’t just look at the advertised interest rate on offer; also look at the comparison rate of the loan and the revert rate, as this is likely to be the rate that you’ll be charged at the end of the fixed period if you don’t refinance or renegotiate your loan.
  • Features. Fixed rate loans may not generally offer as many features as other types of loans, but some may still offer the ability to make additional repayments, a redraw facility or even an offset account. Keep in mind that interest rates and annual fees tend to increase in line with the inclusion of these kinds of features.
  • Fees. Keep your eyes peeled for fees such as upfront and annual fees. Some lenders may not charge any of these on their fixed rate home loans, while some may charge higher-than-average fees. Be sure to check the key facts sheet of any home loan product you’re considering to figure out what kind of fees you might end up on the hook for.
  • The fixed rate period and loan term. Consider how long you would like to fix your interest rate for (usually between one and five years), as well as your desired overall loan term. Both these things will influence the overall cost of the loan.

You may want to speak to a financial advisor or to one of our Home Loan Specialists at this stage to get a clearer idea of what you might want from a home loan.

Expert tips for choosing the right fixed rate home loan for you

Our General Manager of Money, Stephen Zeller, wants to make sure Australia’s homebuyers are choosing a home loan with the right considerations in mind. His top tips when it comes to fixed rate home loans are:

Stephen Zeller
General Manager – Money

Breaking a fixed loan can be pricey

Some homebuyers initially take out a variable rate loan with the intention of fixing their rate later, in case they decide they don’t like the property or neighbourhood they’re living in. If you decide you want to move for this reason, being on a fixed rate home loan could potentially entail substantial break costs.

Consider a packaged loan option

Some lenders might offer you a lower fixed rate if you take out one of their ‘packaged’ home loan account options that comes with an annual fee. No one likes additional fees, but if they unlock a lower rate, it may be worth considering – especially considering how many thousands of dollars homebuyers pay in interest charges.

We’re here to help!

With so many different fixed rate terms and product options available, it can be daunting trying to figure out which products may suit your needs. Our home loan comparison tool can provide you with an easy-to-read breakdown of the different rates available for various fixed terms, as well as provide an overview of any home loan products you’re interested in. We also have a team of expert Home Loan Specialists on call who can talk you through any details or questions you’d like to talk through over the phone instead of online.

The basics of fixed rate home loans

What is a fixed rate home loan?

How do fixed rate home loans work?

What is a split loan?

Should I fix my home loan?

Managing a fixed rate home loan

Can I make additional repayments on a fixed rate home loan?

What fees do fixed rate home loans come with?

Can I break my fixed rate home loan?

Important to know

Pros and cons of fixed rate home loans

Redrawing on a fixed rate home loan

The impact of RBA cash rate changes on fixed rate home loans

Meet our home loans expert, Stephen Zeller

Stephen Zeller
General Manager – Money

Stephen has more than 30 years of experience in the financial services industry and holds a Certificate IV in Finance and Mortgage Broking. He’s also a member of both the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and the Mortgage and Finance Association of Australia (MFAA).

Stephen leads our team of Home Loan Specialists, and reviews and contributes to Compare the Market’s banking-relating content to ensure it’s as helpful and empowering as possible for our readers.