Fixed vs Variable Mortgage Calculator
Compare the total cost of a fixed rate versus a variable rate mortgage over your fixed period — and see the break-even rate.
Fixed vs Variable Rate Mortgages in Australia
Choosing between a fixed and variable rate home loan is one of the most common — and consequential — decisions Australian borrowers face. Both have genuine advantages, and the right choice depends on your financial situation, risk tolerance, and view on where interest rates are headed.
How This Comparison Works
The calculator computes the monthly repayment for each option over the full loan term, then tallies the total cash cost over just the fixed period. This is the most meaningful comparison period: once the fixed term ends, your rate changes — either to the revert rate or a newly negotiated rate — so it's impossible to compare the full loan fairly beyond that point.
The break-even variable rate is the variable rate at which both options would cost exactly the same over the fixed period. If the variable rate rises above this level at any point during the fixed term, fixing would have been the better choice on a cost basis.
Advantages of a Fixed Rate
A fixed rate loan locks in your repayment amount for the fixed period, providing certainty and protection against rate rises. This makes budgeting easier and removes the stress of watching RBA announcements. Fixed rates are particularly valuable for borrowers with tight cash flow or those who know they won't be making significant extra repayments.
Advantages of a Variable Rate
Variable rate loans offer greater flexibility: typically unlimited extra repayments, access to offset accounts (which can save substantial interest), and the ability to refinance or pay off the loan without break costs. When rates fall, variable borrowers benefit immediately. Historically, variable rates have often worked out cheaper than fixed rates over the long run, though this is not guaranteed.
The Revert Rate Risk
When a fixed term ends, loans automatically roll to the lender's standard variable rate — which is typically not the most competitive rate available. Many borrowers are caught off-guard by this "revert rate" and end up paying above-market rates for extended periods. Set a calendar reminder to review your loan 2–3 months before your fixed period expires.
The Split Loan Alternative
If you can't decide, a split loan lets you fix part of your mortgage while keeping the rest on a variable rate. This provides partial certainty while maintaining some flexibility for extra repayments and offset benefits.