Home loans · Plain-English guide
Fixed, variable, or a bit of both? The choice affects how your repayments behave, how much flexibility you have, and what it could cost to change your mind later. Nobody can tell you where rates are heading, us included, so this guide sticks to how each option works.
By Russell Carter, Partnerships Manager at Goodlend. Last reviewed 22 October 2026.
Fixed, variable and split at a glance
A general guide; features differ between products, so check the loan you’re considering.
Fixed rate loans
A fixed rate locks in your interest rate for a set period, usually one to five years, so your repayments stay the same even if market rates move. That makes budgeting easier. The trade-offs: extra repayments may be limited, and a break cost may apply if you repay, refinance or sell during the fixed period. Ask what happens when the fixed period ends, so the change doesn’t catch you by surprise.
Variable rate loans
Your rate can go up or down over time, and your lender decides when and by how much. Variable loans often come with an offset account or redraw, and many allow extra repayments. Features can cost more, so weigh what you’d actually use.
Split loans
Fix part of your loan and leave the rest variable, for example 50/50 or 20/80. You get some certainty and some flexibility at the same time.
Want an offset and a fixed rate?
Offset accounts usually come with variable loans. Ask whether a split loan would let you keep one on the variable part.
How an offset account works
An offset account is a transaction account linked to your home loan. Its balance reduces the amount of your loan that’s charged interest:
It can be worth it if you have a large loan, keep a regular savings balance and want flexible access to your money. It may not be worth it if you usually keep a low balance and the loan charges higher fees, or a higher rate, for the feature. Compare what it costs with the interest you’d expect to save.
Principal and interest, or interest-only
Fixed or variable is about how your rate behaves. Principal and interest or interest-only is about what your repayments pay off. Most people choose principal and interest, which pays down the loan as well as the interest. With interest-only, your repayments cover just the interest for a set period, so the amount you owe doesn’t go down, and repayments rise when that period ends. Check you could afford the higher repayments later.
Loan term matters too
Shorter term
Higher repayments, less interest overall
Longer term
Lower repayments, more interest overall
Your term works together with whichever rate type you choose, so look at both.
Questions that help you decide
- How long do you expect to keep this loan before you sell or refinance?
- How would your budget cope if repayments went up?
- Do you want to make extra repayments, or use an offset account?
- Is your income steady, or does it vary?
- Could you need to sell, refinance or restructure during a fixed period?
- Are there fees for extra repayments, or break costs if you repay early?
- What happens when a fixed or introductory rate ends?
How Goodlend helps
We walk you through the trade-offs for your situation, using loans from our panel of over 30 lenders, and explain what each option means for your repayments and flexibility. The decision stays yours. You don’t pay us a fee: lenders pay us a commission when your loan settles, and we’ll show you upfront how we’re paid. Part of our commission goes to a charity you choose, through Shout for Good.
Buying your first home? See our first home buyer page. Coming to the end of a fixed rate? Read our refinancing guide. Local to the inner west? See our Footscray page.
Goodlend mortgage brokers
Weighing up fixed or variable? Let us walk you through it.
Start with a conversation about your plans, your budget and the features you would actually use.
General information only. This article doesn’t take into account your objectives, financial situation or needs, and it isn’t credit advice. Any home loan is subject to lender approval and conditions.
Goodlend Mortgage Brokers is a trading name of Gariwed Falls Pty Ltd (ACN 682 875 798) ATF Holvor Investments Unit Trust No. 1, credit representative 556461 of Connective Credit Services Pty Ltd (ACL 389328).
