Choosing to go with a home loan that comes with a fixed or variable interest rate will depend upon your personal and financial circumstances. Fixed and variable rates both offer unique advantages and certain conditions that can impact your decision.

Here are some of the key factors to consider when working out which type of home loan is right for you.

Advantages of a fixed rate home loan

The main advantage of a fixed rate home loan is certainty. You can lock in your interest rate for a set period – typically between one and five years – and plan for the future, knowing that your repayments will remain the same during that time.

With Unity Bank's Fixed Rate home loans, your loan will automatically roll over to the applicable standard variable rate when the fixed term period expires. Upon the expiration of your fixed rate period, you may need to review interest rate options with one of our Lending Specialists to decide if a further Fixed Rate option is right for you.

Key points:

  • Lock in your interest rate for the term, so you know what your repayments will be
  • Set weekly, fortnightly or monthly repayments
  • Protect yourself against interest rate rises
  • You can make extra early repayments without penalty - max $10,000 per annum
  • Plan for the future and set financial goals with confidence.
  • You WILL benefit from any future interest rate increases during the fixed period. For example, if variable interest rates increase during your fixed period, your fixed rate won't change.

Things to consider about a fixed rate home loan

A fixed rate home loan is not as flexible as a home loan with a variable rate. It is worth keeping this in mind if you think your financial situation is likely to change in the future.

Key points:

  • With Unity Bank's Fixed Rate home loan, you can only make up to $10,000 in additional repayments per annum without incurring an early repayment adjustment.
  • You will not benefit from any future interest rate falls.


Advantages of a variable rate home loan

If you are looking for flexibility and a range of features in your home loan, a standard variable rate home loan may be better suited to you.

With a variable rate loan, your interest rate can rise or fall throughout the loan term. The interest rate a Bank offers can be affected by several factors, including the Reserve Bank of Australia (RBA) Cash Rate, Economic Climate and variable funding costs for the Bank.

Key points:

  • With Unity Bank's Variable Rate home loans, you can make unlimited additional repayments.
  • You can also make unlimited redraws on any additional repayments you've made, at no extra cost on most of Unity Bank's Variable Rate home loans.
  • With a fixed rate, you are locked in and unable to benefit from interest rate falls, a variable rate WILL enable you to benefit from any interest rate reductions implemented by the Bank.

Things to consider about a variable rate home loan

A variable rate home loan can help you repay your home loan sooner by taking advantage of falling interest rates and continuing to pay the same repayments when rates fall. However if rates increase, you may be required to increase your loan repayments to ensure your loan is still repaid within the original term.

Key points:

  • Your repayments may increase if rates go up.
  • It can be harder to budget for the future as you can't be sure how interest rates might move.

Splitting & switching your loan

You can choose to split your home loan by nominating a proportion of the loan as fixed and variable. It means you have the certainty of a fixed rate on the part of your loan as well as the flexibility to make extra repayments on the variable rate part of your loan. And if you have a Unity Bank Variable Rate home loan, you can easily switch your existing home loan from a variable to a fixed rate at a later date if required. 

Just contact us, and one of our lending specialists can help you work out if this option is right for you. You can make an appointment online, by phone on 1300 36 2000 or email us