Stage 03 of 5 · A week or two, in parallel with looking at properties
Choosing a loan
Comparing what is actually different between products, which is usually the structure and the fees rather than the number on the poster.
What gets decided here
- Fixed, variable, or split?
Fixed buys certainty for a defined period and costs flexibility: extra repayments are usually capped and breaking early can carry a substantial cost. Variable moves with the market and normally allows unlimited extra repayments and a full offset. A split does some of each, which suits people who want a predictable floor without giving up an offset.
- Offset account, redraw, or neither?
An offset is a transaction account whose balance reduces the interest charged. Redraw is money you have already paid into the loan and can pull back, often with conditions and sometimes withdrawn at the lender's discretion. They behave differently for tax purposes on an investment property, which is worth advice before you choose.
- What does the comparison rate actually tell you?
It folds most fees into a single number on a standardised example loan. It is the fairest way to line two products up, and it is still only an example — your loan size and term will differ, and it excludes some costs entirely.
- What is the total over the term, not the month?
A longer term lowers the monthly figure and raises the total interest substantially. Deciding the term deliberately, rather than defaulting to thirty years, is one of the few choices with a five-figure consequence.
Before this stage ends
- Write down the comparison rate, not just the advertised rate, for each option
- Confirm the annual package or ongoing fee, and what it actually includes
- Confirm whether extra repayments are allowed and whether redraw is free
- If considering fixed: ask in writing how a break cost would be calculated
- Model the repayment at a rate about three points higher than the offer
Where people slip
- Choosing on the headline rate and inheriting a package fee that cancels the saving out.
- Taking a fixed rate without checking the revert rate that applies when the fixed period ends.
- Assuming an offset comes free. On many products it sits inside a package with an annual fee.
Who sets the rules here
General information about how the Australian home buying and lending process works. Thresholds, concessions and scheme eligibility are set by federal, state and territory agencies and change; each page links to the agency that sets the rule. Reviewed 17 August 2026.