Fixed vs Variable Rates: Which One Actually Makes Sense?

Why this decision matters more than people think

Choosing between fixed and variable isn't just about picking a rate — it's about how you manage your loan over time.

And despite what you might see online, there isn't a "best" option. There's only what fits your situation.

What we'll cover

• The difference between fixed and variable

• When each option makes sense

• A practical way to approach the decision

What is a variable rate?

A variable rate:

• Moves up and down with interest rates

• Offers flexibility (extra repayments, offset accounts)

Pros

• Flexibility

• Ability to repay faster

• Benefit if rates fall

Cons

• Less certainty

• Repayments can increase

What is a fixed rate?

A fixed rate:

• Locks in your rate for a set period (1–5 years)

Pros

• Certainty of repayments

• Protection from rate increases

Cons

• Limited flexibility

• Break costs if you exit early

What this means for you

Most borrowers don't need to pick one or the other.

A split loan often makes more sense:

• Part fixed (certainty)

• Part variable (flexibility)

Common mistakes

• Fixing purely out of fear

• Going fully variable without understanding risk

• Trying to "time the market"

Next step

If you want to understand what structure makes sense for your situation, we can run through a few scenarios together.