Fixed vs variable: which is right for you?

Fixed or variable is one of the first questions every borrower faces, and there's no universally correct answer. It comes down to how you value certainty versus flexibility, and what's happening in your own life.

The case for fixed

A fixed rate locks your repayment for a set period, usually one to five years. That's certainty - your repayment won't move even if rates rise, which makes budgeting easy. The trade-offs are less flexibility (limits on extra repayments, often no offset account) and potential break costs if you need to exit or refinance during the fixed term.

The case for variable

A variable rate moves with the market - up or down. In return you generally get flexibility: offset accounts, redraw, and the freedom to make extra repayments and pay the loan down faster. The trade-off is that your repayment can rise if rates do, so there's more to plan for.

Splitting the difference

You don't always have to choose. Many borrowers split their loan - part fixed, part variable - to get some repayment certainty while keeping the flexibility of an offset and extra repayments on the variable portion. It's a practical middle ground worth considering.

How to decide

The right answer depends on your cash flow, how long you plan to keep the loan, whether you expect to make extra repayments, and how comfortable you are with rate movement. There's no prize for guessing the market - there's just the structure that fits your situation.