Skip to Content

Should you fix your home loan?

September 11, 2023 | 5 min read 


Summary: Deciding whether to fix your home loan involves a careful analysis of your financial situation, future plans, and the prevailing economic climate. A fixed-rate home loan can provide stability and protection against rising interest rates but may limit your flexibility and potential savings. On the other hand, a variable-rate home loan can offer more flexibility, but it does expose you to interest rate fluctuations.

Key takeaways

  • An understanding of the benefits of fixing your home loan, including payment stability, protection from rate hikes, and certainty over long-term financial planning. 
  • The potential drawbacks to consider when choosing to fix, such as missing out on rate drops, higher initial repayment rates, and restrictions on the level of additional repayments.

When contemplating home ownership or refinancing an existing mortgage, we typically face the decision of choosing between a fixed-rate or variable-rate home loan. While both options have their merits, deciding whether or not to fix your home loan requires careful consideration of various factors. 

This guide provides a comprehensive analysis of the pros and cons of fixing your home loan to help you make an informed decision.

Understanding fixed-rate home loans

A fixed-rate home loan is a mortgage with a set interest rate that remains constant for a predetermined period, typically between one to ten years. This means that regardless of market fluctuations, your monthly mortgage repayments will remain unchanged during the fixed period. After the fixed period ends, the loan usually reverts to a variable rate unless you choose to refinance or renegotiate.

Pros of fixing your home loan

Fixed home loans come with a range of benefits, with the common thread through each being predictability and a degree of financial certainty. 

  • Payment stability - One of the most significant advantages of a fixed-rate home loan is the predictability it offers. With a fixed interest rate, you can budget more effectively as your mortgage payments remain consistent, making it easier to manage your finances.
  • Protection from rate increases - If interest rates rise during your fixed term, your mortgage repayments will remain unaffected. This can provide peace of mind and protect you from potential financial strain due to increased borrowing costs.
  • Long-term planning - Fixed-rate home loans are beneficial for individuals who prefer long-term financial planning and want to secure a consistent interest rate over several years.
  • Rate environment predictability - When market interest rates are expected to rise, fixing your home loan can be a wise decision as it allows you to lock in a lower rate before the increase takes effect.

Cons of fixing your home loan

Whilst fixing your home loan can be beneficial, you should be aware that it can have its drawbacks under certain market conditions. 

  • Limited flexibility - The main drawback of a fixed-rate home loan is its limited flexibility. If you decide to sell your property or refinance during the fixed period, you may be subject to break fees, which can be substantial.
  • Missing out on rate drops - While you are protected from rate increases, you will also miss out on potential savings if market interest rates decline during your fixed term.
  • Higher initial rates - Fixed-rate home loans often have slightly higher interest rates than variable-rate loans to account for the lender's risk associated with locking in a rate.
  • Smaller extra repayments - Many fixed-rate home loans limit the level of extra repayments you can make during the fixed period, reducing your ability to pay off your mortgage faster.

Factors to consider before fixing your home loan

Consider the current economic conditions and interest rate forecasts. If interest rates are at historical lows and are expected to rise in the near future, fixing your home loan might be a prudent choice.

Assess your financial stability and capacity to handle potential rate fluctuations. If you value the certainty of fixed payments and can afford the slightly higher rates, a fixed-rate loan could be suitable.

Evaluate your long-term plans and how they may align with your mortgage. If you anticipate selling your property or refinancing in the near future, a variable-rate loan might offer more flexibility.

Conduct a thorough comparison of fixed and variable-rate home loan offers from various lenders. Analyse interest rates, fees, and loan features to find the most suitable option.

Making the decision

Seeking professional advice can ease the decision-making process. Consult with a mortgage broker or financial adviser to understand your individual circumstances better. They can provide personalised advice based on your financial goals and market conditions.

Another option to consider is to split your loan, fixing a portion and leaving the rest as a variable rate. This strategy combines the benefits of both options, offering some stability and the potential for savings.

It’s also important to review your loan on a regular basis, rather than setting and forgetting. If you opt for a fixed rate, it's essential to periodically review your loan to ensure it still aligns with your financial objectives. Circumstances may change, and refinancing could become a viable option.


Deciding whether to fix your home loan involves a careful analysis of your financial situation, future plans, and the prevailing economic climate. A fixed-rate home loan can provide stability and protection against rising interest rates but may limit your flexibility and potential savings. On the other hand, a variable-rate home loan can offer more flexibility, but it does expose you to interest rate fluctuations.

Ultimately, the right choice depends on your individual circumstances, risk tolerance, and long-term financial goals. Consulting with a mortgage broker or financial advisor can be invaluable in helping you make an informed decision that aligns with your unique needs and preferences. Remember that both fixed and variable-rate loans have their merits, and the best option is one that suits your specific situation and future plans.

Choosing the right home loan structure will set you on a path towards a secure and comfortable financial future, so it is important that you take the necessary time to get it right.



* Based on KPMG Super Insights 2023 Report as at May 2023 KPMG Super Insights 2023 Report

Super with MLC

As one of the largest super providers in Australia,* we’re focused on delivering competitive returns, so your money continues to grow. When it comes to support, we go the extra mile— providing general super advice at no additional cost.

Become a member today


Related links

What does a mortgage broker do and should you use one?

The first home super saver scheme: a handy guide for homebuyers

You might also be interested in

NEWS & UPDATES | 30 NOV 2023

A Note from Dan

The great economic fear over what may happen in the Middle East relates to the potential for a conflict that goes far beyond Israel and Hamas, which would likely send the oil price skyrocketing. However, it’s also possible that oil prices would not remain elevated for an excessively long time.

8 min read 

Find out more

NEWS & UPDATES | 20 NOV 2023

Money Mantras: Building financial wellness one step at a time

Achieving financial wellbeing requires more than just smart investments and strategic planning. We have developed five ‘money mantras’ offering you a roadmap to financial success that is not only effective but also empowering.

6 min read 

Find out more

  • This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at November 2023 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. It is recommended that you consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you make any decisions about your superannuation. You can obtain the latest copy of the PDS (or other disclosure documents) and TMD by calling us on 132 652 or by searching for the applicable product at You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.