Choosing the right home loan

Fixed vs variable, offset vs redraw, P&I vs interest-only, the four decisions that decide what your loan actually costs.

11 min readBy Sarah ChenStage 6 of 8

Most first-home buyers should be on variable principal & interest with an offset account. Here’s the four-question test that gets you there in five minutes.

Variable vs fixed

Variable

Best forMost first-home buyers

OffsetYes, full offset usually available

Extra repaymentsUnlimited

Break costNone

Fixed (1–3 yrs)

Best forStrong rate-rise view, no offset need

OffsetOften partial only or none

Extra repaymentsCapped (often $10–20k/yr)

Break costCan be tens of thousands if rates fall

WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.