With interest rates at an all-time low, you may be wondering whether you should fix your home loan or choose a variable rate option. This is an equally important question if you’re looking to buy a new home, or if you already have a home loan and simply want to make sure you’re getting the best deal possible.

Of course, there is a third option to consider – splitting your home loan. This allows you to hedge your bets by locking in part of your loan at the current record low fixed interest rates, and leaving the other part of the loan to fluctuate with market conditions.

Let’s look at a few considerations to help you decide what’s right for you:

What are the advantages of a fixed rate home loan?

• Easier budgeting
  You know exactly what your regular repayments will be for a set period of time (fixed terms are usually between one and five years).
• No worries about interest rate rises
  You can relax knowing your repayments won’t rise – even if official interest rates do.

What are the advantages of a variable rate home loan?

• You benefit from interest rate cuts
  If interest rates continue to fall, it is possible that you could end up paying a lower interest rate than if you’d chosen a fixed rate.
• You are not locked in for a fixed term
  If you want to sell your home, switch to a different loan, or payout the loan early, you can do so easily without having to pay a break fee.
• You might have access to more flexible features
  Some financial institutions don’t allow you to make extra repayments, redraw funds or have a mortgage offset account on their fixed rate home loans (or, indeed, sometimes not even on their variable rate loans). It pays to shop around, however, as places like Queenslanders Credit Union offer all these benefits on their full range of fixed and variable home loans, without charging extra fees.

What are the advantages of a split home loan?

If you are uncertain about which way rates are heading (let’s face it, who can accurately predict how rates will move?), you can make a bet both ways and “do the split”.

Queenslanders Credit Union is seeing a rise in the popularity of split rate home loans at the moment. By fixing part of your loan and keeping the other part variable, it allows for a mixture of security and flexibility, meaning you can enjoy the best of both worlds.

Find out more about the Queenslanders Credit Union Split Home Loan. You can also access a free calculator to work out your repayments and read about Australia’s best home loans.