What is a fixed rate home loan?

Opting for a fixed rate home loan ensures that your interest rate remains unchanged and locked in for the agreed term. By having a locked-in rate, any fluctuations in interest rates will not affect your loan. The fluctuation of an interest rate can be influenced by various factors, including market conditions, operational and business adjustments, as well as supply and demand.

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Loan Interest Rates Comparison Rate*
1 Year Fixed
$150,000+; LVR 90% or below 		6.39% p.a. 6.74% p.a.1
2 Year Fixed
$150,000+; LVR 90% or below		 6.19% p.a. 6.69% p.a.1
3 Year Fixed
$150,000+; LVR 90% or below		 5.49% p.a 6.47% p.a.1
4 Year Fixed
$150,000+; LVR 90% or below		 6.19% p.a 6.66% p.a.1
5 Year Fixed
$150,000+; LVR 90% or below		 6.29% p.a 6.68% p.a.1

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Rates Interest Rates Comparison Rate
1 Year Fixed
$30,000+; LVR 90% or below		 6.49% p.a. 7.47% p.a.
2 Year Fixed
$30,000+; LVR 90% or below		 6.29% p.a. 7.34% p.a.
3 Year Fixed
$30,000+; LVR 90% or below		 5.59% p.a. 7.03% p.a.
4 Year Fixed
$30,000+; LVR 90% or below		 6.29% p.a. 7.14% p.a.
5 Year Fixed
$30,000+; LVR 90% or below		 6.39% p.a. 7.10% p.a.

Benefits of a fixed home loan rate

Repayment certainty on fixed loans

A fixed interest rate allows you to lock your rate, this provides security on what you are paying on principal and interest repayments for the agreed term, so repayments won't change.

Budget Easier with fixed loans

Budget with more confidence knowing your home loan remains the same each week, which gives you certainty for future expenses.

Protection from rising interest rates on your home loan

A fixed home loan protects you from interest rate increases, but this protection is only for the period of the fixed rate term, not the full term. If interest rates rise multiple times, while yours remains unchanged the other variable rates may be increasing. This may mean that when your fixed term agreement ends your interest rate will then revert to the current standard rate and this could be a significant jump.

What happens when my fixed rate period ends?

Once your fixed interest period ends, your loan will typically revert to a variable rate. If interest rates have risen you may face a significant increase in your repayments. At the end of the fixed rate term you do have the option to refix the loan or continue with a variable rate. Always contact your home loan provider and negotiate your rate and term.

Barriers of a fixed rate home loan

Market interest rate reductions on fixed rate home loans

This can happen, and this can be a downfall to a fixed rate loan. If you have a home loan with a variable rate the interest rate can drop and this will also mean that your repayment can also drop. However, with a fixed rate loan your interest rate and repayment are locked in for the agreed fixed rate term.

Extra repayments are not always allowed on fixed loans

Making extra repayments to reduce the loan amount is how you can finalise that mortgage quicker. With most fixed rate loans, you are not able to make unlimited extra repayments. So, if you are wanting to reduce the principal and interest of your loan amount, then a variable rate might suit you more. However, most banks do offer the option to have a fixed rate loan and still make limited lump sum repayments subject to an annual cap.

Are there any break costs on fixed loans?

With fixed interest rates on a home loan there may be some break costs if you decide to refinance or change the variation to your home loan. Be sure to investigate these before considering if the loan is right for you.

How long does the fixed rate period last on a home loan?

A fixed rate period is usually the agreed term, and this can fluctuate from anytime between 1 to 5 years. After the fixed rate period ends the loan reverts to a variable interest rate.

Can I have an offset account on a fixed rate home loan?

Very few lenders offer an offset account on a fixed rate home loan, but if you can score one of these then you can offset your interest rate with your savings. This is like making additional repayments on a variable mortgage and means your savings can offset the balance of your mortgage and reduce the interest you pay over time. Northern Inland offer an offset account on fixed home loans, enquire online about one today.

Can I have a fixed and variable rate home loan?

Indeed, you can have a split rate home loan on eligible loans. This type of loan allows for a division of the loan period, with one part having a fixed rate and the other part having a variable rate. This arrangement provides you with the flexibility to make additional repayments towards your home loan. It is worth noting that the interest charges will vary between the two parts of the loan. However, this can work to your advantage if you intend to pay off the home loan ahead of schedule, as the mortgage repayments on the portion with the variable rate will not increase significantly.

 

Fixed home loan rate vs variable home loans

Depending on what you are looking for in a home loan depends on your current financial situation and objective. Weigh up the economic factors around you if you are unsure whether to go with fixed or variable.

  • For instance, are the rates changing frequently?
  • Are you concerned about cash flow?
  • What fees or break costs are involved?

These factors should be considered when deciding whether to choose a fixed or variable rate home loan. You could always look at the different comparison rate on each home loan product, which can be a true indicator of ongoing fees that come with the loan.

Be sure to do some thorough research on fixed rate home loans and get professional advice before signing a loan contract so you can make the right decision for your financial needs.

For all loan enquiries chat with a member of our lending team by arranging an appointment on 02 6763 5111.

Important Information

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Credit eligibility criteria, terms and conditions, fees and charges apply.

Please refer to the Target Market Determination (TMD) in Disclosures and Home Loan Key Facts Sheet to see if this product suits you.

Loan to Value ratios are calculated based on type and location of eligible security property.

Northern Inland reserves the right to withdraw, extend or vary this offer.

1 This comparison rate is based on a $150,000 loan over a term of 25 years.
2 This comparison rate is based on a $300,000 loan over a term of 25 years.
3 Minimum $500 per draw