Change Loan Type – Gain Control When Rates Rise (2026)

Are you feeling the pinch with fluctuating interest rates on your variable home loan? You're not alone. Many Australians are considering whether they can switch their variable rate loans to a fixed rate to gain some financial stability. But how do you know if it's the right move for you?

Understanding Variable and Fixed Loans

Before you decide to switch, it’s crucial to understand the differences between variable and fixed loans. A variable rate loan means your interest rate can change over time, influenced by the Reserve Bank of Australia's cash rate and other market conditions. This can lead to unpredictable monthly repayments.

On the other hand, a fixed rate loan locks in your interest rate for a set period, usually between one to five years. This means your repayments remain consistent, allowing for easier budgeting. However, fixed rate loans can lack flexibility, often featuring restrictions on extra repayments and redraw facilities.

Current Market Rates and Options

As of 2026, the Australian home loan market is seeing variable rates ranging from 6.49% to 8.50%, while fixed rates are currently between 6.75% and 7.80% depending on the lender and the fixed term. It's essential to compare these rates to understand potential savings or costs.

Loan Type	Interest Rate Range	Features
Variable	6.49% - 8.50%	Flexible repayments, potential for lower rates
Fixed	6.75% - 7.80%	Stable repayments, limited flexibility

Switching from a variable to a fixed rate can sometimes incur fees, such as break costs or switching fees. These can vary widely between lenders, so it’s important to check with your current lender or consult a mortgage broker like Esteb and Co, who have access to an extensive panel of 83+ lenders.

Steps to Change from Variable to Fixed Loan

If you’ve decided that switching to a fixed rate is the best option for your financial situation, follow these steps:

1. Review Your Current Loan: Check your loan contract for any terms related to switching rates, including potential break fees.
2. Compare Lenders: Use Esteb and Co’s resources to compare fixed rate options from different lenders to ensure you get the best deal.
3. Calculate Costs: Consider any fees associated with switching and whether the fixed rate will save you money over your desired term.
4. Apply for the Change: Contact your lender to initiate the switch. You may need to fill out forms or provide additional documentation.
5. Seek Professional Advice: Consult with a mortgage broker if you're unsure about any terms or potential costs associated with the switch.

Tips and Considerations

Switching to a fixed rate can be a strategic move, but it’s essential to consider your long-term plans. Here are some expert tips:

• Plan Ahead: If you anticipate selling your property or refinancing within the next few years, a fixed rate might not be ideal due to potential break costs.
• Understand Rate Lock Fees: Some lenders offer a rate lock feature for a fee, which guarantees a fixed rate even if market rates change before settlement.
• Consider Split Loans: If you’re unsure, a split loan offers a combination of fixed and variable rates, providing both stability and flexibility.
• Monitor the Market: Stay informed about the Reserve Bank of Australia's actions, as changes in the cash rate can impact both variable and fixed rates.
• Check for Additional Features: Some fixed loans offer limited extra repayment options or offset accounts. Investigate these to maximise your financial flexibility.

Frequently Asked Questions

1. Can I switch from a variable to a fixed rate loan at any time?
   Yes, but you may incur fees, and it's advisable to check your lender's terms or consult a broker for specific advice.
2. What are the common fees associated with switching to a fixed rate?
   Possible fees include break costs, application fees for the new loan, and rate lock fees.
3. Is it possible to switch back to a variable rate later?
   Yes, you can switch back, but you might face additional break fees or new application fees.
4. How long should I fix my rate for?
   This depends on your financial situation and market predictions. Common terms range from one to five years.
5. What is a split loan?
   A split loan allows you to divide your mortgage between fixed and variable rates, giving you the benefits of both types.
6. How do interest rate changes affect fixed and variable loans?
   Variable loans fluctuate with market rates, while fixed loans remain the same, offering protection against rate rises.
7. Can Esteb and Co help with the switch?
   Yes, with access to over 83 lenders, Esteb and Co can help you find the best fixed rate loan suited to your needs.