Fixed vs Variable Home Loan Calculator
Compare the total cost of fixing your rate versus going variable. Enter your fixed rate, variable rate, and what it reverts to after the fixed period. Then see which option wins.
Fixed Rate Option
Variable Rate Option
A Lending Specialist can compare fixed and variable deals from dozens of lenders and explain what makes sense for your situation.
Fixed vs variable home loans in Australia
Choosing between a fixed and variable rate home loan is one of the most common dilemmas for Australian borrowers. Both have genuine advantages — the right choice depends on your financial situation, risk tolerance, and what you think interest rates will do.
Fixed rate home loans
A fixed rate loan locks in your interest rate for a set period, usually 1 to 5 years in Australia (unlike the US, where 30-year fixed mortgages exist). During the fixed period, your repayments do not change regardless of what the RBA does. This is great for budgeting certainty.
The catch is that when the fixed term ends, your loan automatically reverts to the lender's standard variable rate (the revert rate). This revert rate is often significantly higher than the advertised variable rate, so many borrowers get a nasty shock if they do not refinance or renegotiate at this point.
Fixed rate loans also come with restrictions:
- Extra repayments are usually capped at $10,000–$20,000 per year
- Offset accounts are typically not available on fixed portions
- Breaking a fixed rate loan early (e.g. to sell or refinance) can trigger a significant break fee
Variable rate home loans
Variable rate loans move with the RBA cash rate and market conditions. When the RBA cuts rates, your repayments fall. When they rise, so do your repayments. About 80% of Australian mortgages are variable, partly for this flexibility.
Variable loans typically offer:
- Unlimited extra repayments with no penalty
- Offset accounts (which can save significant interest)
- Redraw facilities to access extra repayments
- Freedom to refinance or sell without break fees
The split loan option
Many Australians split their loan, fixing part (for certainty) and keeping the rest variable (for flexibility). For example, fixing $400,000 and keeping $200,000 variable lets you maintain an offset account on the variable portion while still locking in certainty on most of your debt.
When does fixing make sense?
Fixing generally makes sense when:
- You need certainty for budgeting (e.g. you have a tight budget or are a first home buyer)
- You believe rates will rise during the fixed period
- You don't plan to make significant extra repayments
- You're unlikely to sell or refinance before the fixed term ends
Frequently asked questions
Does fixing always save money if rates rise?
Not necessarily. Even if variable rates rise above your fixed rate during the fixed period, you still need to factor in the revert rate after the fixed term. If the revert rate is significantly higher than the variable rate you'd be on after those years, the fixed option can still end up costing more overall.
Can I refinance before my fixed term ends?
Yes, but you will likely pay a break fee (also called a break cost or economic cost). Break fees are calculated based on how much rates have moved since you fixed and the remaining term. They can be substantial, sometimes tens of thousands of dollars. Always get a break cost quote from your lender before refinancing a fixed rate loan.
What should I do when my fixed term ends?
Do not just roll onto the revert rate. It is usually the highest rate the lender offers. Contact your lender to negotiate, and simultaneously get quotes from other lenders. Switching lenders (refinancing) at this point typically has no break fee since you are at the end of the fixed term. Compare offers using our Refinance Calculator.
How do I calculate which is cheaper?
Use the calculator above. It models the total interest paid under each scenario — the fixed option (at the fixed rate during the fixed period, then the revert rate for the remainder) vs the variable option (at a constant variable rate for the full term). The "cheapest" option depends heavily on what happens to variable rates after you fix, which nobody can predict with certainty.