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What’s the difference between a fixed and variable rate home loan?

April 26, 2017fixed home loan rate

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What’s the difference between a fixed and variable rate home loan?

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A fixed rate loan means that the interest rate, which applies to your loan, will stay the same for the fixed rate period. For example, if you take out a 3 year fixed rate home loan, the interest rate will be the same for all 3 years, which means you know exactly what your repayments will be. A variable rate loan means that the interest rate could change throughout the life of the loan. For example, if the Reserve Bank of Australia increases or decreases official interest rates, these changes will typically affect the variable interest rate that applies to the loan.