Fixed Rate Home Loans Australia | Lagos Financial

A fixed rate home loan locks in your interest rate for a set period — typically one to five years — giving you certainty over your repayments regardless of what happens to the RBA cash rate. At the end of the fixed period, your loan reverts to the lender’s variable rate unless you refix or refinance.

How Fixed Rate Loans Work

When you choose a fixed rate, your lender guarantees a specific interest rate for your chosen term. Your repayments stay exactly the same for that entire period. Once the fixed term expires, the loan automatically moves to the lender’s standard variable rate (known as the “revert rate”), which is often higher than the discounted variable rates available to new customers.

Fixed Rate Terms Available

  • 1 year fixed — Short-term certainty, useful when you expect rates to fall
  • 2 year fixed — The most popular fixed term in Australia
  • 3 year fixed — Medium-term certainty for budgeting
  • 5 year fixed — Maximum certainty, though often at a higher rate

Advantages of Fixing Your Rate

  • Repayment certainty — Know exactly what you will pay each month, making budgeting straightforward
  • Protection from rate rises — If the RBA raises rates during your fixed term, your repayments stay the same
  • Peace of mind — No need to worry about market movements or lender decisions

Risks and Limitations

  • Break costs — If you need to refinance, sell, or make major changes during the fixed term, break fees can be substantial (sometimes tens of thousands of dollars)
  • Limited extra repayments — Most fixed loans cap additional repayments at $10,000-$20,000 per year
  • No offset account — Few lenders offer a full 100% offset on fixed loans; some offer partial offset or none at all
  • Miss out on rate cuts — If the RBA reduces rates, you remain locked at the higher fixed rate
  • Revert rate risk — When your fixed term ends, the revert rate is often significantly higher than competitive variable rates

When to Fix Your Home Loan

Fixing makes sense when you want budget certainty, believe rates may rise, or simply prefer knowing exactly what your repayments will be. It is particularly popular among first home buyers on tight budgets and borrowers who do not need the flexibility of extra repayments or offset accounts.

Rate Lock — Protecting Your Fixed Rate

Fixed rates can change between application and settlement. A “rate lock” (typically costing 0.10-0.15% of the loan amount) guarantees today’s fixed rate for 60-90 days while your loan is being processed. This is worth considering when buying off-the-plan or if settlement is several weeks away. Lagos Financial can advise whether rate lock makes sense for your situation.

Frequently Asked Questions

What happens when my fixed rate expires?

Your loan reverts to the lender’s standard variable rate. Before this happens, your broker should review the market and either negotiate a competitive variable rate with your current lender, refix at a new fixed rate, or refinance to a better deal elsewhere.

Can I make extra repayments on a fixed loan?

Most lenders allow limited extra repayments, typically capped at $10,000-$20,000 per year. Exceeding this cap triggers break cost fees. If making extra repayments is important to you, consider a split loan instead.

Should I fix now or wait?

This depends on the current rate cycle. A mortgage broker can help you understand market expectations and model the cost difference between fixing now versus waiting. In a rising rate environment, fixing early protects you; in a falling environment, waiting may save you money.

Get Expert Advice from Lagos Financial

With close to 20 years of experience and access to 60+ lenders, Victor Lagos and the Lagos Financial team can help you find the right loan for your situation. Book a free assessment or call us to discuss your options.

Our Services

Lagos Financial offers a full range of mortgage broking services across Australia:

We serve clients in Sydney, Bondi Junction, Brisbane, Launceston, and Australia-wide.

About the Author
Victor Lagos is a licensed mortgage broker (ACL 546774) and founder of Lagos Financial, with close to 20 years of finance industry experience since beginning his career at Bluestone Mortgages in 2006. A member of the Finance Brokers Association of Australia (FBAA) since 2015 and the Australian Financial Complaints Authority (AFCA — 98399), Victor helps Australians build wealth through tailored home loan and property investment strategies, working with 60+ lenders nationwide. Last reviewed: March 2026.

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