Fixed vs Variable Interest Rates: What First Home Buyers Need to Know

Choosing a Home Loan? It Pays to Know Your Interest Rate Options

When you take out a home loan, one of the biggest decisions you'll make is choosing between a fixed or variable interest rate. Here’s what each one means and how to decide what’s right for you.

🔒 Fixed Interest Rate

A fixed rate means your interest rate stays the same for a set period (usually 1 to 5 years). That means:

✅ Your repayments won’t change

✅ Easy to budget and plan

✅ You’re protected if interest rates rise

🚫 But you may miss out if rates drop

🚫 Less flexibility, however fees may apply if you make extra repayments or exit early

Good if: You like certainty and want to lock in a rate to protect against future increases.

🔄 Variable Interest Rate

A variable rate moves up or down with the market. That means:

✅ You could pay less if rates go down

✅ More flexibility with ability to make extra repayments or pay off the loan early with fewer restrictions

🚫 Your repayments can go up if rates rise

🚫 Harder to plan your budget as repayments can change

Good if: You want flexibility and can handle some ups and downs in your repayments.

⚖️ Can’t Decide? Consider a Split Loan

If you’re stuck between the two, why not do both?

With a split loan, you divide your mortgage into two parts:

- One part has a fixed rate for stability

- The other part has a variable rate for flexibility

It gives you the best of both worlds with some protection if rates rise, but also the ability to pay off extra or take advantage if rates fall.

💡 Which One’s Right for You?

Everyone’s situation is different. At Personalised Finance, we help first home buyers like you choose the right loan structure based on your goals, lifestyle, and budget.

📞 Chat with Hendy today to find the smart way to structure your home loan.