To Fix Or Not To Fix


Updated March 19th 2020

Frank Schiraldi

CIB Finance

With interest rates at their lowest level for some time and with most lenders 1 to 3 years fixed interest rates now being lower than the banks variable interest rate, many clients are asking the question: Do we fix our loan or is it better to have a variable rate?

Which loan is right for me?
Well, that all depends on your circumstances. Variable and fixed loans have their advantages and disadvantages so it’s imperative to consider these before making a decision. Split loans combine features of both variable and fixed allowing you to broaden your options.



  • When the Reserve Bank or the market lowers interest rates, these savings will usually be passed on to you.
  • You can make additional repayments without incurring a penalty then have the option to redraw the additional funds at a later date.
  • You have the option to split your loan so that it is both fixed and variable.
  • Provides more flexibility than other types of loans.


  • When the reserve Bank or market increases rates, the interest rate on your loan will also increase – meaning you will pay more interest.



  • During the fixed term, your repayment won’t change making budgeting easier.
  • During the fixed period, if interest rates go up your loan interest rate and repayments won’t change.


  • Most fixed loans limit the flexibility of being able to make extra repayments, with most lenders allowing up to a maximum extra repayment amount each calendar year (without being charged a fee by the lender). You are not able to redraw the extra repayments during the fixed rate period.
  • When market rates go down, the rate on your loan will remain the same so you won’t have the benefit of potential savings.
  • If you choose to exist or switch your loan during the fixed rate period, there may be early repayment or Break Costs.

How easy is it to switch all or split part of your loan to a fixed rate?

It’s is as easy as ringing the bank or completing a loan switch form. Though there are many factors to be considered before making a change to your loan. This is where we are able to help you by researching what is available and if making the change is the right solution for your situation, then we help make the process as smooth as possible.