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· Posted on
February 21, 2024

What is the difference between fixed and variable rate home loans?

There are so many options when taking out a mortgage - let's dig into the difference between fixed and variable interest rates.

What's the key learning?

  • Fixed interest rates will stay the same for a period of time and protects you against potentially rising interest rates
  • Variable interest rate is where your interest rate can rise and fall throughout your loan period, able to pay off sooner

So how do I understand mortgages again?

When a bank is considering lending to you, they’ll ask you the age old question: do you want a fixed rate home loan or variable rate home loan? Sooo ahhh, what exactly is the difference?

Fixed interest rate:

With a fixed rate mortgage, your payments will be locked in for a period of time.

This will let you plan your future and protect you against potentially rising interest rates (it can’t get much lower than right now, surely).

Variable interest rate:

If you’re more of a live-in-the-moment type, your variable rate home loan might suit you better. A variable rate is where your interest rate can rise and fall throughout your loan period.

On the plus side, if interest rates fall, you might be able to pay off your loan sooner.

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Disclaimer: Flux Technologies Pty Ltd (ABN 86 634 507 172) is an authorised representative (Representative No. 525288) of Mozo Pty Ltd who is the holder of AFSL No. 328141. We also provide general advice on credit products under our own Australian Credit Licence No. 530103. The product information presented does not constitute an offer and we are not recommending or suggesting any particular product. Any product advice presented is of a general nature only, and is not to be taken as any sort of advice as it has not taken into account your personal circumstances, objectives, financial situation or needs. Flux may not cover all products available to you. Check out our Credit Guide and Financial Services Guide for more information.

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