The Easiest Way to Lock in a Fixed Rate as a First Home Buyer

Fixed Rate Loans Give You Repayment Certainty When You Need It Most

A fixed rate loan locks your interest rate for a set period, typically one to five years. Your repayments stay the same regardless of what the Reserve Bank does with the cash rate. For first home buyers in Carnegie, that certainty can make budgeting far less stressful during the early years of ownership.

The trade-off is limited flexibility. Most fixed rate products don't offer an offset account, and extra repayments are usually capped at around $10,000 to $30,000 per year depending on the lender. If you break the loan early, you'll likely face break costs calculated on the difference between your fixed rate and the current wholesale rate your lender can achieve.

Consider a buyer purchasing a two-bedroom unit near Koornang Road with a 10% deposit. They fix the rate for three years at the time of settlement. For the next three years, their monthly repayment doesn't change, even if variable rates rise. They know exactly what they'll pay each month, which makes managing other costs like strata fees and utilities far more predictable.

How Carnegie Buyers Use Fixed Rates to Budget Around Rising Costs

Carnegie sits within the Glen Eira local government area, where homes are a mix of heritage character properties, modern townhouses, and low-rise apartment developments. The suburb is well connected via the Frankston and Pakenham train lines, and proximity to Chadstone Shopping Centre adds to its appeal for young buyers.

First home buyers in Carnegie are often stretching to enter the market. Locking in a fixed rate means they can plan around known repayment amounts while managing other expenses like council rates, which in Glen Eira can vary depending on property type and valuation. A fixed rate also provides breathing room if you're transitioning from renting and adjusting to ownership costs.

In our experience, buyers who fix their rate early in the ownership cycle do so because they value certainty over flexibility. If you're not planning to make large lump sum repayments and you don't have significant savings sitting in an offset account, a fixed rate can make sense.

Can You Split Your Loan Between Fixed and Variable?

Yes, and many first home buyers do. A split loan lets you fix a portion of your borrowing while keeping the rest on a variable rate with an offset account. You might fix 50% or 70% of the loan to lock in repayment certainty, then use the variable portion to park savings and reduce interest on that part of the debt.

This structure works well if you expect to receive irregular income, such as bonuses or family gifts, and want the option to reduce your variable balance without hitting the caps that apply to fixed loans. The variable portion also gives you access to redraw or offset features that aren't typically available on the fixed side.

The exact split depends on your savings behaviour and risk tolerance. If you're likely to keep a buffer in your offset account, a larger variable portion makes sense. If certainty matters more, you might fix a higher percentage and accept the trade-off in flexibility.

What Happens When Your Fixed Term Ends?

When your fixed period expires, your loan automatically moves to the lender's standard variable rate unless you choose to refix or refinance. Standard variable rates are often higher than discounted variable rates offered to new customers, so it's worth reviewing your options at least three months before the fixed term ends.

You're not locked to your current lender once the fixed term expires. You can refinance to a new lender to access a lower rate or better loan features without incurring break costs. If rates have fallen since you first fixed, refinancing might save you a meaningful amount over the life of the loan.

If rates have risen and you want to maintain repayment certainty, you can refix with your current lender or a new one. The rate you'll be offered depends on market conditions at the time, not the rate you originally locked in.

Fixed Rates and First Home Buyer Schemes in Victoria

Victorian first home buyers can access a $10,000 grant for new homes valued up to $750,000, plus a full stamp duty exemption on properties valued up to $600,000 or a concession on properties between $600,001 and $750,000. These concessions apply to both new and established homes, provided the property will be your principal place of residence.

You can also apply for the Australian Government 5% Deposit Scheme, which allows you to purchase with a 5% deposit without paying lenders mortgage insurance. The scheme works with both fixed and variable rate loans, though the specific loan features available depend on the participating lender you choose.

Most participating lenders offer fixed rate products under the scheme, but you'll need to confirm whether your chosen lender allows split loans or restricts you to either fully fixed or fully variable. Some lenders limit the fixed rate term to three years under the scheme, while others offer up to five years. Clarify these details during the pre-approval process so you're not locked into a structure that doesn't suit your situation.

Should You Fix Now or Wait for Rates to Fall?

Trying to time the interest rate cycle is difficult, and waiting for rates to fall can backfire if they rise instead or if property prices increase while you're on the sidelines. If you've found a property that fits your budget and you're ready to buy, the decision to fix should be based on your need for repayment certainty rather than speculation about future rate movements.

If you're concerned about locking in at the wrong time, a split loan structure lets you hedge both directions. You get some fixed rate certainty while keeping part of your loan variable in case rates fall. Once the fixed portion expires, you can reassess based on market conditions at that time.

Another option is to fix for a shorter term, such as one or two years, rather than the full five. Shorter fixed terms usually come with slightly lower rates, and you'll have the opportunity to refix or switch to variable sooner if conditions change. The downside is that you'll need to make a decision again in a shorter timeframe, which adds a layer of active management to your loan.

Call one of our team or book an appointment at a time that works for you. We'll walk through your deposit size, savings pattern, and repayment goals to find a fixed rate structure that matches how you'll actually use the loan.

Frequently Asked Questions