Differences between variable vs fixed interest rates.

If you’re taking out one of ME’s Flexible Home Loans, one of the big decisions you’ll need to make is whether to go with a fixed or variable interest rate.

Variable rates

A variable rate can shift as changes happen in the home loan market, which can push rates up or down. That can be good for you if rates are getting cheaper, or it can increase your expenses if rates go up.

A variable rate can provide flexibility and additional features such as redraw, offset facilities and making extra repayments with no penalties.

Fixed rates

A fixed interest rate locks in a rate when you settle your purchase, so that for a set period (one to five years) you’ll pay the same rate, no matter what’s happening with variable rates.

You can also opt for a fixed rate at any time during the life of your loan, and set it to last for up to five years.

Locking into a fixed-rate can provide certainty, for the fixed term at least. Because your rate doesn’t change with the market, your monthly repayments will stay the same, which can make budgeting easier.

See our fixed rate options.

You always have the option to end your fixed-rate period early, but this may incur what is known as a ‘prepayment fee’ for ‘breaking’ your loan contract, so make sure you do the maths to see if it is worth the cost.

Split loans

With ME’s Flexible Home Loan you’ve also got the option of splitting your loan into portions – which means you could have part of the loan set at a fixed rate, and the rest of the loan variable.

Compare rates

To compare our different rates, check out our home loan comparisons.