Variable or fixed — which home loan actually costs less?

General advice only · AFSL 222640 · Global Mutual Funds Pty Ltd

The direct answer

Nobody can know in advance — it depends on where rates go. The practical question is what you value: fixed gives repayment certainty but usually limits extra repayments and offset accounts, and can carry break costs if you sell or refinance early. Variable gives flexibility but moves with the market. Many borrowers split the loan to get some of both.

What it depends on

The full answer depends on your specific circumstances. Here’s what matters.

How long you will keep the loan

If you might sell, refinance or restructure within the fixed term, break costs can be significant when rates have fallen since you fixed.

Your cash flow buffer

If a rate rise would put you under real pressure, certainty has value beyond the maths.

Features you use

Offset accounts and unlimited extra repayments can reduce interest substantially. Check whether the fixed option removes them.

The last 10%

What a qualified professional can add

The answer above covers the general position. Here’s where professional judgement — applied to YOUR specific situation — makes the difference.

Modelling split-loan scenarios against your cash flow
Estimating potential break costs before you commit
Comparing the full feature set across lenders, not just the rate

Questions to ask before you engage one

If you decide to engage a professional, these questions help you evaluate whether they’re right for your situation.

How are break costs calculated on this fixed loan?

Can I make extra repayments or use an offset while fixed?

What rate will the loan revert to when the fixed term ends?

What does a 50/50 split look like for my repayments?

Your next step

List how long you expect to keep the property and how much buffer you have each month. Those two answers usually point you towards fixed, variable or a split.

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