No rate type is right for everyone — only the one that fits your plans. A plain-English look at the trade-offs, and the split option in between.
Fixed or variable is one of the first decisions borrowers face — and it's often framed as a bet on where rates are heading. It's really a question about certainty versus flexibility.
Fixed rates: certainty
A fixed rate locks your interest rate (and repayments) for a set term, usually one to five years. That predictability is valuable if you like knowing exactly what leaves your account each month.
- Repayments won't move if rates rise.
- Usually limited extra repayments and often no offset account.
- Break costs can apply if you exit or refinance early.
Variable rates: flexibility
A variable rate moves with the market. You gain features and freedom, at the cost of certainty.
- Unlimited extra repayments and offset accounts are common.
- Repayments fall if rates drop — and rise if they climb.
- Easier to refinance or switch without break costs.
The split option
You don't always have to choose. Many borrowers split their loan — part fixed, part variable — to get some certainty and some flexibility. The right mix depends on your budget, your plans, and how you feel about risk.
The ideal structure is the one that matches your life, not a forecast. If you're weighing it up, let's talk it through against your actual numbers.
