ANZ Fixed Rate home loan

The fixed interest rate for your loan is the rate that applies on the day the loan is drawn down (not at the time of application) so there’s a chance it could change during that period.  If you're keen to lock in an interest rate you can do so by paying a Lock Rate fee that will secure the interest rate as it applies on the date of payment for up to 90 days.

A Lock Rate fee of $750 per $1 million of lending (or part thereof) applies.  This means a fee of $750 applies for any loan up to $1 million, then $1,500 for any loan amount between $1 million and $2 million. If you have more than one loan, the same rule will apply to each loan. Here are a few examples:

• For a single loan of $400,000, the fee would be $750
• For a single loan of $1,300,000 the fee would be $1,500
• For two fixed loans of $1,300,000 and $400,000, the fee would be $2,250

Talk to your home loan specialist for more information.

Generally, you can choose how long you would like to fix your home loan interest rate. ANZ offers fixed home loan rates for one, two, three, four, five, seven and 10-year loan terms.

When your fixed rate term ends, a variable interest rate will then apply to your home loan and your repayment amount will change. If you don’t want to stay with the variable rate, you may be able to fix your rate again for another period (talk to your lender about whether that could be an option for you). 

An advantage of a fixed interest rate is the certainty that your home loan repayments will stay the same throughout the fixed rate term. You won't have to worry about rate changes and how they could affect your repayments. This can make budgeting easier.

However, if you want to make additional repayments, pay off your loan early or refinance during the fixed rate period, you may need to pay Early repayment costs (PDF). Be careful and check with ANZ before doing this as early repayment costs can be very large, and can change from day to day.

Fixed home loan rates could work for you if your priorities are certainty and stability. Just remember that the trade-off is flexibility and the benefit of interest rate reductions (if they occur during your fixed rate period).

Fixed home loan rates mean the interest rates on your home loan are locked in for a set period. Rate changes will not affect you and your repayments will remain the same during the fixed rate term. Fixed rate home loans provide certainty and stability. However, you may be charged costs if you change any of the terms of the loan, for example, make additional repayments above a permitted limit.

Variable home loan rates can change from time to time. This is great if interest rates go down but your budget would need to cover the possibility of rates going up as well. Variable rate home loans offer greater flexibility because you can make additional repayments and redraw, pay off your loan early or take advantage of an offset account.

As both fixed and variable rate loans have pros and cons, split loans are a way to get the best of both worlds. For example, you could split a $400,000 loan 50/50, with half in an ANZ Fixed Loan and the other half in an ANZ Standard Variable Loan. 

You can split your loan into whatever ratio of fixed and variable suits you.

It’s not so much about whether a fixed or variable home loan is better than the other. Both offer different benefits, so it’s about which one is better for you, taking into account your particular circumstances, objectives and needs.

Fixed rate home loans provide more certainty because your interest rate and repayments are locked in for the duration. However, there can be less flexibility in making additional repayments, paying off the loan early and refinancing before the fixed term is up.

On the other hand, variable rate home loans can provide the flexibility of making additional payments and redrawing when needed, using an offset account and paying off the loan early. However, variable rates go up and down, so there’s less certainty about your repayment amounts. Your minimum repayment amount will be lower when rates go down but it will also go up if rates increase, which can make budgeting more challenging.

If you can't decide between fixed and variable rates, you might want to consider splitting your loan. That way you can enjoy the benefits of both options. 

Learn more about the difference between variable and fixed home loans.

You may have to pay a break cost (also known as Early repayment costs (PDF) if you pay off your fixed rate loan before it's full duration, switch to another loan before the end of the fixed term or make early or additional payments. This cost can be very large and can change from day to day.

If you choose interest only, the minimum payment amount on your loan will be lower during the interest only period because you are not required to repay any of the loan principal. You will have to repay the principal down the track and so you may end up paying more over the life of your loan. There may be additional restrictions on the amount you can borrow or loan type you can select if you choose to pay interest only.

Choosing to repay principal and interest means that, with each repayment, you're paying off interest charges as well as some of the loan principal.

Learn more about payment types.

LVR stands for 'Loan to Value Ratio' and it's the amount you’re looking to borrow, calculated as a percentage of the value of the property you want to buy (as assessed by ANZ). For instance if you’re borrowing $400,000 to buy a $500,000 property, your LVR would be 80% (because $400,000 is 80% of $500,000).

LVR is important because it may affect your borrowing power. Generally, the lower the LVR the better, as it carries less risk for the lender. If your LVR is above 80% (that is, you're looking to borrow more than 80% of the value of the property you want to buy), you may need to pay Lenders Mortgage Insurance (LMI). This insurance protects the lender - ANZ, not you - if you default on your home loan and there’s a shortfall following the sale of the property. Generally speaking the higher your LVR, the more LMI will cost.

Learn more about ANZ LMI with our Key Fact Sheet (PDF) or read our article on Lenders Mortgage Insurance.

*Property value is ANZ's valuation of the security property and may be different to the price you pay for a property.

Your Loan to Value Ratio (LVR) is the amount you’re looking to borrow, calculated as a percentage of the value of the property you want to buy*. For instance if you’re borrowing $400,000 to buy a $500,000 property, your LVR would be 80% (because $400,000 is 80% of $500,000).

The calculator will show your estimated LVR rounded up to one decimal point. For instance if your estimated LVR is calculated as 80.01%, it will be rounded up to 80.1%. Having an LVR of 80% or less (and for some loans 70% or less) means you could access some of ANZ’s higher discounts, and may be able to avoid paying Lenders Mortgage Insurance (which protects the lender if you default on your loan). Learn more about ANZ Lenders Mortgage Insurance with our Key Fact Sheet (PDF).

Generally, the lower your LVR the better. This is because from the lender’s perspective, a lower LVR carries less risk. Plus, a lower LVR means you’ll have more equity in your home from the start. Find out more about LVR and what it means for your home loan.

*Property value is ANZ's valuation of the security property and may be different to the price you pay for a property.

If you choose to make interest only payments on an ANZ Fixed Rate, your fixed period and interest only period will be the same. For instance, if you choose to pay interest only payments for two years, your home loan will be a two-year ANZ Fixed Rate, reverting to Principal and Interest payments on a variable rate at the end of the 2 years.