Loan Rates

What you need to know about fixed home loan rates

Luke Harris
Jun 2, 2021
Yard Financial Pty Ltd | ACN 623 357 513 | Australian Credit Licence 509481

Table of Contents

Shopping for a home loan comes with many new terms and information you need to know to ensure you make an informed decision. Your research may find many mentions of fixed-rate home loans, fixed interest rates or fixed home loan rates. 

When deciding if you want a fixed rate home loan, you will need to choose between certainty or flexibility. Understand what it really means to have a fixed rate home loan, the pros and cons and some of the differences between fixed and variable home loan rates.

What are fixed home loan rates?

Fixed-rate home loan rates mean that the interest rate you pay on your home loan is fixed or won't change for a period. Generally speaking, fixed home loan rates are fixed for a period between one and five years.

This means that during your fixed rate period, the interest rate you’re charged on your home loan is fixed and won’t change even if interest rates in the market change. After this period, the interest rate will revert to the standard variable rate or another variable rate negotiated with your lender unless you organise to refinance or refix.

Pros of getting a fixed-rate home loan

  • You get the certainty of what your interest rate will be.
  • You can budget for your mortgage repayments.
  • You’ll be protected from interest rate rises.
  • You have the freedom to plan for your financial future with the knowledge that your home loan is set.

Cons of getting a fixed-rate home loan

  • You lose flexibility. If you want to refinance or make changes to your loan, you may incur fees.
  • You’ll lose access to additional features like offset accounts or redraw facilities.
  • You may get other features like extra repayments, but they may be limited or incur fees.
  • You may miss out on interest rate savings if the rates decrease.

How are fixed-rate home loans different from variable rate home loans?

The most significant difference between fixed-rate home loans and variable rate home loans is certainty vs flexibility. With a fixed-rate home loan, you get the certainty that your interest and, therefore, your mortgage repayments won't change. In contrast with a variable rate home loan, you have the flexibility to make changes to the loan whenever you want, like refinance and make extra repayments.

How to find the best fixed-rate home loans

You may think that the best fixed home loan rates would be the lowest in the market. They are attractive but finding the best fixed home loan rates means considering how long you want the fixed interest rate to last.

Before looking for the best fixed rate home loan, you need to first work out how long you want to fix your interest rate. Once you've decided that, you can then look in the market for the best fixed home loan rate for that period. If you're ready to find a new fixed home loan rate, check out Yard's fixed interest rates here.

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