What is a fixed rate loan?

A fixed rate loan sets your mortgage interest rate at a guaranteed level for a defined period, typically between one and ten years. During this term, your monthly or fortnightly repayments remain unchanged, offering predictable budgeting and protection from interest rate rises.

When you lock in a fixed rate, the lender absorbs the risk of rates moving in the market. If rates rise, your repayment amount does not follow. If rates fall, your rate stays where it was set at the start of the term. Once the fixed period ends, your loan may switch to a variable rate, another fixed term, or you may refinance entirely.

Fixed rate mortgages appeal to borrowers who want certainty in their housing costs and prefer to avoid the fluctuation that comes with variable rates. They can be particularly useful when interest rates are low and you want to protect that rate, or when planning long-term budgets. Repayment amounts are calculated upfront so there are no surprises during the fixed term.

A mortgage broker can help you compare fixed rate options across lenders in Sydney and find a term that suits your financial situation and risk tolerance.