Is a Fixed, Variable or Split Loan Right for You in Today’s Market?
When it comes to choosing a home loan in Australia, one of the biggest decisions you’ll face is whether to go fixed, variable, or split. Each option has its pros and cons, especially in today’s changing economic climate where interest rates and market uncertainty can play a big role in your repayment strategy.
Fixed Rate Home Loans: Lock It In
A fixed rate home loan means your interest rate, and therefore your repayments, stay the same for a set period, typically 1 to 5 years.
Why go fixed?
- Certainty: You’ll know exactly what your repayments will be each month.
- Protection against rate hikes: If the Reserve Bank lifts rates, your loan stays the same.
- Great for budgeting: Ideal if you’re working with a tight or fixed income.
But there are downsides:
- Less flexibility: You might be limited in how much extra you can repay.
- Break fees: If you want to refinance or sell during the fixed period, it could cost you.
- Missing out on rate drops: If the market shifts and interest rates fall, you won’t benefit.
Best suited to: First-home buyers, growing families, or anyone who values financial stability and predictability.
Variable Rate Home Loans: Ride the Market
With a variable rate loan, your interest rate can go up or down based on changes in the market.
Why choose variable?
- Flexible repayments: Make extra repayments, access redraw, and refinance easily.
- Lower fees: Typically fewer restrictions and lower exit costs than fixed loans.
- Potential savings: If rates fall, your repayments could too.
Things to consider:
- Unpredictability: Rates can rise, increasing your repayments.
- Budget pressure: If rates spike suddenly, it could squeeze your cash flow.
Best suited to: Investors, second-home buyers, or anyone wanting to pay off their loan faster and make use of flexible features.
Split Loans: The Best of Both Worlds?
A split loan lets you divide your mortgage into two parts, one fixed, one variable. For example, you might fix 60% and leave 40% variable.
Why split your loan?
- Balance risk and flexibility: Enjoy fixed repayments on one side and make extra payments on the variable portion.
- Strategic planning: Split structures can be tailored to your cash flow and goals.
- Peace of mind: If rates rise, part of your loan is protected.
What to watch for:
- Complexity: Managing two portions of a loan means more to monitor.
- Still partially exposed: Your variable portion can still be affected by rate hikes.
Best suited to: Homeowners wanting security and flexibility, or borrowers unsure which way rates will go.
So, What’s Best in Today’s Market?
With interest rates having risen over the past few years but showing signs of levelling out, many Aussies are asking whether they should fix while rates are high or wait for potential cuts.
Here’s a practical approach:
- Fix if: You want stability for the next few years and don’t plan on refinancing or selling.
- Go variable if: You’re comfortable with some risk and want access to flexible features.
- Split if: You want the security of fixed repayments but also want the freedom to make extra payments and stay agile.
The key is aligning your loan with your personal goals, whether that’s paying it off sooner, growing your family, or investing in a second property.
How BrokerCo Can Help
At BrokerCo, we don’t just match you with any loan, we help you build a smart strategy based on your lifestyle, income, and future plans. Whether you’re a first-home buyer or experienced investor, we’ll guide you through:
- Choosing between fixed, variable or split
- Refinancing for a better deal or more flexibility
- Setting up offset or redraw facilities
- Avoiding hidden fees and traps
We’re not tied to one lender, so you get genuine advice and access to a wide panel of banks and non-bank lenders.
Ready to Talk Strategy?
Let’s chat about where you’re headed, and how to structure your loan to get there. Whether you’re buying, refinancing or just doing your homework, we’ll help you make confident, informed choices.