Fixed vs Floating – Which Home Loan Rate Is Right for You?

Fixed vs Floating – Which Home Loan Rate Is Right for You? 

Choosing between a fixed or floating home loan rate can be one of the most important decisions you'll make as a borrower. Both options have their advantages, and the right choice depends on your financial goals, risk tolerance, and the current market conditions. In this post, we’ll break down the pros and cons of each to help you make a confident, informed decision. 

Fixed Rate Home Loans 

A fixed rate means your interest rate (and therefore your repayments) stay the same for a set period—usually 1 to 5 years. 

Pros: 

• Predictable repayments make budgeting easier 

• Protection from interest rate increases 

• Great for those who value financial certainty 

Cons: 

• Less flexibility—there can be fees for making extra repayments or breaking your loan early 

• You won’t benefit if interest rates drop 

When it might suit you: 

• You’re on a fixed income and prefer stable repayments 

• You’re risk-averse and want to lock in a rate while they’re low 

• You’re buying your first home and want financial certainty for the next few years 

Floating Rate Home Loans 

A floating (or variable) rate moves up or down based on the market. Your repayments can change over time. 

Pros: 

• More flexibility—often no penalties for extra repayments or paying off your loan early 

• You benefit if interest rates fall 

Cons: 

• Your repayments can increase if rates go up 

• Harder to budget with changing payment amounts 

When it might suit you: 

• You have room in your budget for potential increases 

• You’re planning to make extra repayments or pay off your loan early 

• You want flexibility and don’t mind some uncertainty 

What About Splitting Your Loan? 

Can’t decide? You don’t have to. Many lenders allow you to split your mortgage—fixing part of it and keeping the rest floating. It’s a great way to get the best of both worlds. 

Need Help Choosing? 

Everyone’s situation is different. At Boost Brokers, we’ll help you weigh up your options and choose a structure that suits your lifestyle, goals, and risk appetite.