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Can you make extra repayments on a fixed loan?

Alex Ritchie avatar
Alex Ritchie
- 4 min read
Can you make extra repayments on a fixed loan?

Making additional repayments on your home loan is one of the most popular strategies homeowners use to reduce their mortgage repayments and chip away at their principal owing.  

However, not every home loan will allow you to make extra repayments, with fixed rate home loans generally not offering this feature. So, what are your options if you want a fixed rate home loan and you want to make extra repayments? 

Luckily, there are still ways homeowners can have their fixed rate cake and eat it too. 

Which fixed rate home loans offer the ability to make extra repayments?

Making extra repayments is a helpful loan feature offered by some lenders. The ability to chip away at your debt when you get a windfall, such as a generous tax refund or a bonus at work, can save you thousands of dollars in interest charges and even shave time off of your loan term. 

You may be able to find some lenders that are willing to offer the ability to make extra repayments on a fixed rate home loan. However, they may limit the amount that you can make in extra repayments annually. 

For example, at the time of writing, these are some of the fixed rate home loans that allow for extra repayments:

Home Loan

Interest rate

About

CommBank 4-Year Fixed Rate Home Loan

6.74% (comparison rate 7.54%)

Limited to $10,000 per year

NAB 3-Year FixedChoice Package

6.54% (comparison Rate  7.87%)

Limited to $20,000 per year

ANZ 2-Year Fixed Rate Loan 

6.04% (comparison rate 6.37%)

Limited to $5,000 per year

ING 1-Year Fixed Rate Loan

5.74% (comparison Rate 5.09%)

Limited to $9,999 per year

loans.com.au 5-Year Fixed Rate Home Loan Special

6.04% (comparison rate 6.37%)

Limited to $10,000 per year

Source: RateCity.com.au. Data accurate as of 06/03/2023. 

Generally speaking, fixed rate home loans do not always come with the ability to make extra repayments. This feature is often reserved for variable rate home loans only.

In fact, many of the popular features offered by lenders, such as an offset account or a redraw facility, are reserved for variable rate home loans. This is one of the common trade-offs that homeowners must consider before they apply for their mortgage.  

It’s also important to note that if your home loan does not offer extra repayments, you can be stung with a fee for trying to do so. It’s important that you ensure your home loan does offer the ability to make extra payments free of charge before you attempt this, 

Can you get a fixed rate home loan and unlimited extra repayments?

If you’re struggling to find a fixed rate home loan option that offers unlimited extra repayments, or if you’re just not sure about gambling with a variable interest rate, you may want to consider a split rate home loan.

As the name suggests, a split rate loan allows you to divide up your home loan repayments between these two interest rate types. One portion of your home loan repayments would be on a fixed interest rate, and another portion would be on a variable interest rate.  

This may offer a sort-of ‘best of both worlds’ option for some homeowners who want the flexibility of features offered by a variable rate home loan, with the stability of being able to lock in your interest rate and know what your repayments will be. 

You also do not have to split your rate 50/50, but you can choose to fix 30% or 60% of the home loan repayments, and have the remainder on a variable interest rate. 

Compare home loans in Australia

Product database updated 21 Jul, 2024

This article was reviewed by Personal Finance Editor Peter Terlato before it was published as part of RateCity's Fact Check process.