Fixed vs variable loans

Fixed vs variable loans

When choosing between a home loan with a fixed rate of interest and a home loan with a variable rate of interest, it is important to take both your personal and financial circumstances into consideration.

While both options offer certain advantages and disadvantages, individuals should consider what they will gain and lose through either option.

Fixed-rate home loans are often set for a certain period of time. They remain at the same rate over this period, regardless of whether the interest rate rises or falls. This can be both a good and a bad thing; if the interest rate rises, you will be paying less than the variable rate. However if the interest rate falls, then you will be repaying more than the variable rate.

With a fixed-rate home loan, you cannot make extra loan repayments and you may have to pay a ‘break fee’ if you change your loan or pay it off within the set period.

On the other hand, a home loan with a variable rate of interest can offer more flexibility as it allows individuals to make additional repayments over the course of the loan.

A variable rate home loan can also be more beneficial, especially since it allows individuals to take advantage of falling interest rates. However, if interest rates go up, the loan repayments may also increase. This can make it harder to budget for the future since you can’t know how the interest rates will move.


If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.

Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.

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