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Fixed vs Variable Interest Rates Simplified by RAMS

11 January 2023

Fixed Rate Loans means that the interest rate on your home loan is secured for a term agreed with your lender. Variable Rate Loans change their rates based on market conditions.


Feel at home with Home Loans by understanding the difference between fixed and variable interest rates.

If your home loan has a variable interest rate, the lender can increase or decrease the interest rate on your loan at any time.  This means your loan repayments will vary as your mortgage lender changes their rate.

With a fixed interest rate loan, the interest will remain fixed for the term you choose.  This might be one year, it might be five years.  No matter how much variable interest rates change, your rate will stay the same, for that period of time. 

Before deciding on a fixed rate loan, bear in mind that while it protects you from rate rises in the short term, you could also miss out on some savings if rates go down.  And if you decide to cancel or break your fixed rate contract, or make higher repayments than the lender allows before the end of the fixed-rate period, you may be charged significant fees, called break costs.

Because there are pros and cons to both types of home loans, some people choose to split their loan into fixed and variable chunks.  This strategy gives you a mix of certainty and flexibility that may suit you best.

Helping you understand your home loan options, because Home Loans are what we do.

Speak to a home loan specialist