Loan Types
| Type | Rate | Pros | Cons |
|---|---|---|---|
| Variable | ~6.0–6.5% | Flexibility, offset account, extra repayments | Rate can go up |
| Fixed | ~5.5–6.5% | Certainty — repayments don't change | Break fees, limited extra repayments |
| Split | Mix | Best of both — certainty + flexibility | More complex |
Offset Account
A transaction account linked to your mortgage. Money in the offset reduces the balance your interest is calculated on. $50,000 in offset on a $500,000 loan means you only pay interest on $450,000. This can save tens of thousands over the life of the loan. Only available on variable rate loans.
Extra Repayments
Making extra repayments on a variable loan reduces your principal faster, saving interest. An extra $200/month on a $500,000 loan at 6.5% saves ~$120,000 in interest and pays off the loan 7 years early. Fixed loans typically limit extra repayments to $10,000–$20,000/year.
Comparison Rate
The comparison rate includes fees and charges, giving a more accurate picture of the total cost. Always compare using the comparison rate, not just the advertised rate.
Frequently Asked Questions
Fixed or variable?
Variable if you want flexibility (offset, extra repayments, refinancing). Fixed if you want certainty and are worried about rate rises. Most borrowers do a split — typically 60% variable, 40% fixed.
What's an offset account?
A transaction account linked to your mortgage. Money sitting in it offsets your loan balance, reducing interest. $50,000 in offset on a $500,000 loan means interest is calculated on $450,000.