Fixed Rate Home Loans in Australia

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    What is a fixed rate home loan?

    Getting a fixed rate on your home loan is an excellent way to safeguard your future finances by keeping your interest rate stable. This article teaches you how to make an informed fixed rate home loan comparison in order to get the best deal.

    This type of home loan is built on a locked-in interest rate that will stay the same for a set period of time, typically between 1 and 5 years. After that period ends, you will have the option to re-fix the rate at a different level, or to convert your loan into a variable rate loan. If you do not select a specific option, loans will often automatically revert to a higher variable rate which is tied to the RBA cash rate.

    Many homeowners would love to get the best fixed interest rates in Australia and hold onto them for as long as possible. Unfortunately, there’s a catch: the longer your fixed rate loan term is, the higher the interest rate will be. This is because you are paying a premium for the security of having a set rate for a long time.

    What are the different types of home loan rates?

    Savvy loan shoppers will compare fixed home loan rates to other loan rate types to find out what makes the most financial sense long-term. These are three types of rates to be familiar with:

    Interest rate levelExtra repayments availableHome loan offset account availableBreak fee for early termination
    FixedSet at one pointSeldomSeldomYes
    VariableMoves with marketFrequentlyFrequentlyYes
    SplitPart fixed, part variableFrequentlyFrequentlyYes

    The main thing to note here is the split rate. This is a “have your cake and eat it too” option where a portion of the loan has a fixed rate, while the remaining portion has a variable rate. This is a lower-risk way to get some of the benefits of a variable rate while still keeping a large chunk of the payment at a stable, fixed rate.

    Note also that this fixed rate home loan comparison reveals the different features that certain loan types may lack. In particular, a fixed rate loan agreement is quite unlikely to allow extra repayments or to be compatible with a home loan offset account. Variable loans will typically offer those two features.

    How long should I fix my home loan rate for?

    Home loan terms usually last from 20 to 30 years, but a fixed rate period will be much shorter than this. The most common option is to fix your home loan rate for somewhere around 1 to 5 years, with certain lenders offering as long as 10 year fixed rate home loans. Let’s compare fixed home loan rates of different lengths:

    • 1-2 years

      The shorter term option will traditionally be the lowest fixed rate home loan that you can get, but you’ll have to renew very soon.

    • 3 years

      This is seen as a good balance between loan duration and rate level, often making it the most popular fixed interest rate.

    • 4-5 years

      This option is the most stable, but locking into one rate means you risk losing out on better rates if market conditions shift.

    Pros and cons of a fixed rate home loan

    Getting a handle on the advantages and disadvantages of this loan type will be helpful when trying to find the best fixed rate home loans in Australia. These are some facts to keep in mind:


    • Consistent repayments
    • Easier to budget and plan
    • Avoids interest rate hikes
    • Lower feature costs


    • Limits on additional repayments
    • Potentially high break fees
    • Miss out on interest rate dips
    • Fewer features

    How do I find the best fixed rate home loans in Australia?

    To conduct a detailed fixed rate home loan comparison, there are several aspects of the loan you have to pay close attention to. These include:

    • Interest rates: Be sure to dig into not just the advertised rate, but also the comparison rate which incorporates the extra fees and charges. Also focus on the revert rate, which will become your new rate after the fixed period expires.
    • Fees: Don’t let yourself get caught unaware by any establishment fees, annual fees, account upkeep fees, and particularly early termination fees.
    • Fixed-rate period and overall loan term: Be aware of how long your rate will be fixed for, and how much time you’ll still have remaining on the loan after the rate runs out.
    • Repayment schedule: Check whether you can adjust the repayment schedule to align with your income—either weekly, fortnightly, or monthly. Also ask about additional repayments to help you get ahead and keep interest costs down.
    • Additional features: Find out whether the lender can help you utilise financial tools like a redraw facility or an offset account.

    Fixed rate home loan comparison FAQ

    What is a home loan?
    A home loan, or home mortgage, is a type of secured loan offered by lenders to people looking to buy a residential property. Under this loan structure, the home acts as the collateral for the loan.
    What happens if I want to sell my property during the fixed rate period?
    By selling your property, you are ending the loan and will be liable for the lender’s break fee. The fee is based on how much time you had left on the loan term, and could potentially be thousands of dollars.
    What if I want to refinance my loan during the fixed rate period?
    Refinancing your loan is treated the same as selling your property, meaning it will also trigger the break fee.
    Who is most likely to benefit from a fixed home loan rate?
    These loans are suitable for various groups, including people who plan ahead on their repayments, first time homebuyers, and home investors. All of these groups value long-term stability.
    Can I get a fixed rate loan with a low deposit?
    Yes, many lenders offer fixed rates on their low deposit home loans. You could pay as little as a 5% or 10% deposit and still access a fixed rate home loan. Some buyers might compare fixed home loan rates based on the deposit the lender wants.

    Fixed rate home loan conclusion

    The goal of this guide was to equip you for making a proper fixed rate home loan comparison while shopping for home finance options. Examining the strengths and weaknesses of different loan types is essential. To get the best fixed interest rates in Australia, you need to be a strategy-minded homebuyer thinking several years ahead on your home loan.