Unlock the secrets to Fixed Rate Home Loans

Fixed Rate Loans Lock Your Rate for a Set Period

A fixed rate home loan holds your interest rate steady for an agreed term, usually between one and five years. Your repayments stay the same no matter what happens to the variable rate market during that period.

For FIFO workers, this matters when income consistency is high but cash flow timing can be unpredictable. Knowing your mortgage repayment in month six looks identical to month eighteen removes one variable from your financial planning. If you're rostered on a 2/1 or 4/1 swing and need to budget around leave periods, fixed repayments give you a number you can rely on.

Consider a mobile plant operator who locked in a fixed rate for three years. During that period, the Reserve Bank lifted the cash rate four times. Variable borrowers saw their repayments climb with each movement. The operator's repayment stayed unchanged, which allowed for planned contributions to an offset account during higher earning months without recalculating affordability every quarter.

How Fixed Rates Compare to Variable Options

Variable rates move with market conditions and lender pricing decisions. Fixed rates are priced based on what lenders expect interest rates to do over the fixed term. When the market expects rates to rise, fixed rates are often higher than variable rates at the time you lock in. When the market expects rates to fall, fixed rates may sit lower.

The difference isn't about which product is cheaper today. It's about whether you value certainty over flexibility. Variable loans typically allow unlimited extra repayments and full redraw access. Fixed loans often cap extra repayments at around $10,000 to $30,000 per year depending on the lender, and some don't allow redraws at all during the fixed period.

If you're earning strong FIFO income and plan to make large lump sum payments during cashed-up periods, a fixed rate loan can limit that strategy unless you structure it carefully. That's where split rate loans come in, allowing you to fix part of your loan and leave the rest variable.

Break Costs Apply If You Exit Early

A fixed rate home loan is a contract. If you repay the loan in full, refinance, or exceed your extra repayment limit during the fixed term, the lender may charge a break cost. This cost reflects the difference between the rate you locked in and the rate the lender can now earn by re-lending that money.

Break costs are calculated using a formula based on the remaining fixed term, the loan balance, and current wholesale interest rates. If rates have risen since you fixed, the break cost is usually zero or minimal. If rates have fallen, the break cost can run into thousands of dollars.

In our experience, FIFO workers sometimes underestimate how often their circumstances shift. A new role in Queensland, a partnership buyout, or a decision to upgrade after two years can all trigger an early exit. If you're considering a fixed rate, ask your broker to run a scenario showing what a break cost might look like if you refinance halfway through the term.

Fixed Terms Range from One to Five Years

Most lenders offer fixed terms of one, two, three, four, or five years. Shorter terms give you certainty without locking you in for too long. Longer terms protect you further out but reduce your ability to adjust if your situation changes.

A three-year fixed term tends to suit FIFO workers who want stability through a defined period, such as paying down a chunk of the loan while working a consistent roster, then reassessing when the fixed term ends. A one-year fixed term can work if you expect rates to settle soon but want short-term protection.

Some lenders also offer fixed terms beyond five years, but these are less common and the rates are often less competitive. The longer the term, the more you're betting that rates will move in your favour and that your circumstances won't shift enough to require an exit.

Splitting Your Loan Balances Fixed and Variable Benefits

A split loan divides your total loan amount into two portions: one fixed, one variable. You choose the split, such as 50/50, 60/40, or 70/30. Each portion operates independently with its own rate and features.

The fixed portion gives you repayment certainty. The variable portion lets you make unlimited extra repayments, access redraw, and link an offset account if the lender allows it. This setup suits FIFO workers who want predictable repayments but also want to park surplus income in an offset during roster-on periods.

As an example, a diesel mechanic on a 2/1 roster split a loan with 60% fixed and 40% variable. The fixed portion covered baseline living costs. The variable portion received lump sum payments during each swing, and an offset account linked to that portion held cash reserves for planned leave or unexpected downtime. When the fixed term ended after three years, the variable portion had been paid down significantly, and the mechanic refinanced the fixed portion at a lower rate.

What Happens When Your Fixed Term Ends

When the fixed period expires, your loan automatically reverts to the lender's standard variable rate unless you take action. That revert rate is almost always higher than the discounted variable rate offered to new customers, sometimes by 0.50% to 1.00% or more.

This is not a passive moment. Around 90 days before your fixed term ends, start comparing what refinancing or renegotiating with your current lender might deliver. Lenders know borrowers often sit on revert rates for months without noticing, which is why those rates are priced high.

You can refinance to a new fixed term, switch to variable, or negotiate a better rate with your existing lender. FIFO workers coming off a fixed term often have built equity and improved their loan to value ratio, which can unlock better pricing or remove Lenders Mortgage Insurance on future borrowing.

Offset Accounts Rarely Work with Fixed Rates

Most lenders don't offer offset accounts on the fixed portion of a home loan. A few do, but the rate is usually higher to compensate. If an offset account is important because you hold large cash balances between swings, keep the variable portion large enough to make the offset worthwhile.

An offset account reduces the interest you pay by offsetting your cash balance against your loan balance daily. If you have a variable loan of $200,000 and $30,000 sitting in a linked offset, you only pay interest on $170,000. That benefit disappears if your loan is fully fixed and the lender doesn't allow an offset attachment.

Some FIFO workers assume they can fix the whole loan and still access offset benefits. That assumption costs money. Check the product features before you lock anything in, and structure your split accordingly if offset access matters.

Application Process Matches Standard Home Loans

Applying for a fixed rate home loan follows the same steps as any other owner occupied or investment loan. You'll provide proof of income, living expenses, assets, and liabilities. For FIFO workers, that means recent payslips showing base, allowances, and any overtime or bonuses, plus your employer contract if you're still in probation.

Lenders assess your income differently depending on whether you're permanent or contract. If you've been on the same roster for 12 months or more, most lenders treat your full FIFO income as ongoing. If you've recently started or moved between employers, some lenders apply a discount or ask for a longer employment history.

Once approved, you'll choose your fixed term and rate at settlement or within a rate lock window, usually 90 days. Rates can move during that window, so if you're building or buying off the plan, confirm whether your lender allows you to lock the rate early or if you'll take the rate on the day of settlement.

Call one of our team or book an appointment at a time that works for you. We'll run the numbers on fixed, variable, and split options, show you what break costs look like if you exit early, and structure your loan so it fits your roster and your plans beyond it.

Frequently Asked Questions