Home loans

Fixed vs variable loan: what's the difference?

3 min read

Home loans

Fixed vs variable loan: what's the difference?

3 min read

Researching home loans may not be the most thrilling thing in the world, but it’s important to understand your options. We’ve put together this quick guide explaining the key differences between fixed rate and variable rate loans, and a potential third option you may not have considered.

What’s a fixed home loan?

A fixed home loan allows you to lock in an interest rate for a certain period of time. With Suncorp Bank, that can be 1, 2, 3, or 5 years.

A fixed home loan has a few advantages:

  • It’s easier to budget, as you know exactly how much your repayments will be, which can give you some peace of mind.
  • You’re not at the mercy of interest rates rising, which would potentially increase your repayments.
  • On the flip side, there are some disadvantages:
  • You don’t benefit from any reductions to interest rates during your loan period.
  • Although you can usually make extra repayments on your fixed home loan, you might have to pay a fee to do so if it is over a certain amount.
  • You might not have the same flexibility when it comes to accessing cashback or offsetting your mortgage (more on that later).

Discover Suncorp Bank’s fixed home loans

What’s a variable home loan?

A variable home loan means that your interest rate isn’t locked in, so your repayment amounts can vary as interest rates rise and fall.

On the plus side, that means:

  • if interest rates fall, you might pay less on your loan repayments, and
  • you generally get more flexibility. Having the freedom to offset your mortgage (that is, use the balance of your savings or transaction account to offset against the remainder of your loan balance) and redraw extra payments you’ve made as cashback can help.
  • You have the ability to make extra repayments without incurring a fee.

However, you do still need to keep in mind that:

  • interest rates can fall, but they can also rise, which could leave you forking out more than someone with a fixed interest rate
  • because your repayments can vary, it’s harder to budget, and
  • it’s difficult to predict how much you’ll pay over the life of a home loan due to interest rate fluctuations.

Choosing the right home loan for you

Deciding which loan type will work for you is tough, we know. Instead of choosing between fixed and variable, splitting your home loan might work better for you.

This is exactly what it sounds like — your home loan is part variable, part fixed. You can split it however you like! For example, you could choose 20% of your loan at a fixed rate, and leave 80% of it on a variable interest rate.

Another way to get through the tricky decision process is by talking to a pro. Suncorp Bank has a team of expert Mobile Lenders who offer obligation-free advice at no charge. Check out our Mobile Lenders page to learn more and book an appointment.

Discover Suncorp Bank’s variable home loans

Published 26 August 2022 

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The information is intended to be of a general nature only and any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.

Home Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No. 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Please read the relevant Product Information Document, Lending Fees and Charges and Home Package Plus Terms and Conditions before making a decision regarding any Suncorp Bank products. Fees, charges, terms and conditions apply and are available on request or on our Product Information Documents and Forms page.