Fixed vs Variable Home Loans: How the Numbers Compare

Choosing between a fixed and a variable rate is one of the main decisions on a home loan. Neither is cheaper by default. A fixed rate swaps flexibility for certainty for a few years, and a variable rate moves with the lender's decisions. This guide sets out how each one works, what happens when a fixed period ends, and what the repayments look like in a few scenarios. It was checked against Moneysmart, ASIC and the RBA on 29 October 2026.

HomeLoansCalculator.au is a general information site run by Dominet BV. This page is general information only and is not financial advice. It does not consider your objectives, financial situation or needs. We are not a lender or a mortgage broker and we don't recommend any loan or rate type. Check with a licensed professional or the lender before you act. Figures were checked on 29 October 2026. Read our general information notice. The rates in our examples are made up to show the arithmetic. They aren't forecasts or any lender's rates.

How a fixed rate works

Moneysmart explains that a fixed rate stays the same for a set period, usually between one and five years. Your repayments don't change during that time, even if market rates rise or fall. When the fixed period ends, the loan usually moves to the lender's variable rate, called the revert rate, unless you switch loans or agree to a new fixed period.

What Moneysmart lists in favour:

• you know exactly what your repayments will be
• budgeting can be easier
• you're protected if rates rise during the fixed period

What to weigh against that:

• you won't benefit if rates fall
• you may be charged a break fee if you switch loans, sell or pay off the loan early
• some fixed loans have fewer features, such as offset accounts or the ability to make extra repayments

How a variable rate works

A variable rate can go up or down. Moneysmart notes that your lender decides whether to change the rate and by how much. Changes to the RBA cash rate may influence variable rates, but lenders can also change rates for other reasons. For context, the RBA's cash rate target is 4.60%, effective 30 September 2026, and Moneysmart's switching page says the RBA raised the cash rate four times in 2026 up to that point.

What Moneysmart lists in favour:

• repayments may fall if rates fall
• it's often easier to refinance or switch
• many variable loans allow extra repayments
• features such as offset accounts and redraw are often available

What to weigh against that:

• repayments can rise when rates change
• budgeting can be harder

Split loans

A split loan divides the loan into a fixed part and a variable part, in proportions you agree with the lender. Moneysmart says this can give you more certainty on the fixed part and flexibility on the variable part, such as extra repayments or an offset account. It also warns that split loans can be more complex, because each part can have different rates, fees and conditions.

Worked examples

All examples use a $600,000 loan, principal and interest, monthly repayments, over 30 years. The rates are made up.

Worked example 1, monthly repayments at different rates (example figures).

Worked example 2, the end of a fixed period (example figures). You fix at 5.9% for 3 years. Repayments are $3,558.82 a month. After 36 months the balance is $576,087.22, with 27 years left.

• If the revert rate is 6.5%, the repayment becomes $3,776.57, an increase of $217.75 a month.
• If the revert rate is 7.0%, the repayment becomes $3,962.41, an increase of $403.59 a month.

Moneysmart suggests asking, before you fix, what revert rate is likely to apply and how much your repayments could rise. Fixed rate expiry is also a natural time to compare loans. See refinancing costs.

Worked example 3, fixed against variable over 3 years (example figures). Compare fixing at 5.9% with a variable rate that starts at 6.2% and is recalculated whenever it changes.

In the rising case, the variable repayment goes from $3,674.81 to $3,985.08 a month after the first year. In the falling case it drops to $3,486.48, and the variable loan ends up slightly cheaper than fixing. The table only shows cost. It doesn't count the value of an offset account or extra repayments, which may be available on the variable loan and not the fixed one.

Worked example 4, a 50/50 split (example figures). Split $600,000 into $300,000 fixed at 5.9% and $300,000 variable at 6.2%.

• Fixed part: $1,779.41 a month
• Variable part: $1,837.41 a month
• Total: $3,616.82 a month

If the variable rate rises to 7.2% after 12 months, the variable part is recalculated on its balance of $296,451.40 over the remaining 29 years, giving $2,032.14 a month. The total becomes $3,811.55. Only half the loan is exposed to the rise.

Break fees

Moneysmart says a break fee may be charged if you leave a fixed loan early, and that it can be very high. ASIC's Regulatory Guide 220 explains that break fees are usually based on the difference between your fixed rate and the rate at the time you break, over the rest of the fixed term. If your fixed rate is below current rates, the fee is usually lower or nil. If rates have fallen since you fixed, it is usually higher. RG 220 also notes break fees aren't charged on variable loans.

If there's a real chance you'll sell, refinance or pay the loan down early during the fixed period, get a written estimate of how the break fee would be worked out before you fix.

Extra repayments and offset on fixed loans

Moneysmart's table says fixed loans may limit extra repayments and may have fewer features. Some allow a set amount of extra repayments each year, others none. If you plan to pay extra or keep savings in an offset account, check the conditions for both parts of the loan. Our extra repayments guide shows how much those payments can save.

What this means for you

• Decide what matters more for the next few years: knowing your repayment, or keeping flexibility and features.
• Before fixing, ask the lender what the revert rate is likely to be and work out the repayment at that rate.
• Test your budget against higher rates. Moneysmart's choosing a home loan page suggests checking you could manage if rates rose by 3%.
• Ask how break fees are calculated and what extra repayments are allowed during the fixed period.
• Put a reminder in your calendar a few months before the fixed period ends.

Run your own scenarios in the repayments calculator, read how repayments are worked out, or go back to the calculators hub.

Frequently asked questions

How long can I fix my home loan rate?

Moneysmart says fixed periods are usually between one and five years. After that, the loan usually moves to the lender's variable rate unless you refix or switch.

What happens when my fixed rate ends?

The loan usually reverts to the lender's variable rate, and your repayment is recalculated on the balance and remaining term. In our example, a $600,000 loan fixed at 5.9% for 3 years goes from $3,558.82 to $3,962.41 a month if it reverts to 7.0%.

Can I make extra repayments on a fixed loan?

It depends on the loan. Moneysmart says some fixed loans have fewer features and may limit extra repayments. Check the loan's conditions and any fee for paying more than the limit.

Will I pay a break fee if I sell my home during the fixed period?

You may. Moneysmart says a break fee can apply if you switch, sell or pay off the loan early during the fixed period. ASIC's RG 220 explains it's usually lower or nil if your fixed rate is below current rates, and higher if rates have fallen.

Is a split loan a good compromise?

It can give some certainty and some flexibility, but Moneysmart notes split loans can be more complex, with different rates, fees and conditions on each part. Check the total cost and which part an offset account can link to.

Does the RBA cash rate change my variable rate?

It may influence it, but Moneysmart says your lender decides whether and by how much to change your rate, and can change it for other reasons too.