Author: Xavier Quenon

Banks are clamping down on investors from every angle, with ‘living expenses’ one of the latest factors to draw attention.

So how can you maximise your borrowing power, when every little expense is under the spotlight?

Ten years ago, getting an investment loan was far easier than today. We’ve gone from one extreme to the other, with banks who were previously happy to hand over 100% loans in the past, now fastidiously checking every minor detail before signing an approval.

These checks and balances are an essential part of a healthy banking system as they help investors to avoid over-committing financially. So although many would prefer a return to a more relaxed servicing criteria, this is actually a preferable situation.

That said, we are continually surprised at just how far banks are going when adopting this cautious approach. Since APRA and ASIC intervened, lenders have raised the bar when screening applicants – and currently, it is living expenses they are focused on.

Living costs vs lifestyle costs

In the past, banks have used HEM (Household Expenditure Measure) tables to account for an applicant’s living expenses. Now, they are using the greater figure between expenses declared by the applicant, and the HEM tables.

The new challenge is that some lenders are starting to include items that, in our view, should be classed as discretionary spending, rather than living expenses.

Living expenses are routine bills that can’t be avoided; groceries, petrol electricity and the like. Discretionary spending covers items that we choose to pay for, but that can be stopped at will; take charity donations and restaurant visits for example.

Lenders are grouping a range of discretionary lifestyle items under ‘living expenses’, including:

• Holidays
• Movie and theatre costs
• Alcohol and cigarettes
• Gifts
• Newspapers and magazines
• Cable TV and streaming subscriptions
• Pharmacy and medical visits
• Kids after-school activities
• Takeaways!

Some lenders are going even further by asking for everyday bank account statements, so they can check salary credits and review daily expenditure.

What is the solution?

Our advice to home owners & investors who are shopping for a loan is to do some ground work well before you intend to apply.

It’s unwise to front up to a bank or lender and apply for a loan without due preparation. Unless you earn a high income that allows you to move past the banks’ increasingly stringent criteria and tests, you need to get your financial ducks in a row at least 3-4 months before you wish to apply.

Be aware of your daily expenses and if some are excessive, then you may have to rein them in. It could mean bringing your own lunch to work more frequently, cutting down on alcohol and smoking and even reducing eating out or holiday spending. At the end of the day it depends how badly you want to invest in your next property if your servicing is borderline.

Reviewing your discretionary spending as a routine is a good practice anyway, but it’s particularly important if you’re about to purchase a property. Any savings can make the difference between getting into your first (or next) investment property or not. In addition, these savings can be used towards your deposit or other property buying expenses, so keeping a lid on excess spending can only be beneficial.

Making the wrong call on your home loan could cost you tens of thousands of dollars. With the RBA hiking the cash rate to 3.85% in February 2026 and economists split on whether more increases are coming, Gold Coast buyers are asking the same question: Should I fix my home loan rate or stick with variable?

There’s no one-size-fits-all answer. But after helping hundreds of Gold Coast families navigate fixed vs variable home loan options in Australia, we’ve seen firsthand what works (and what doesn’t) in different situations.

Here’s what you need to know to make the right choice for your property journey.

Key Takeaways

• Fixed rate loans lock in your interest rate for 1-5 years, protecting you from rate rises but limiting flexibility
• Variable rate loans move with the market, offering features like offset accounts and unlimited extra repayments
• Split loans combine both, giving you rate certainty on part of your loan while keeping flexibility on the rest
• Your best choice depends on your budget stability, risk tolerance, and how you plan to manage your loan
• Right now (February 2026), many Gold Coast buyers are locking in fixed rates before anticipated further rate increases

Understanding Fixed vs Variable Home Loans in Australia

When you’re buying your first home on the Gold Coast or upgrading to your next home, one of the biggest decisions you’ll make is choosing between a fixed or variable interest rate.

Fixed-rate home loans lock in your interest rate for a set period – typically between one and five years. Your repayments stay the same regardless of what happens with the RBA cash rate or broader market conditions.

Variable-rate home loans have interest rates that can change at any time. When your lender adjusts their rates (usually following RBA cash rate movements), your repayments go up or down accordingly.

Both types have distinct advantages and trade-offs. Understanding the difference between fixed vs variable rate home loans helps you choose the structure that best suits your financial situation.

Pros and Cons: Fixed Rate Home Loan

Advantages of Fixed Rates

Budget Certainty

You know exactly what you’ll pay each month, fortnight, or week. For families managing tight budgets or first home buyers still finding their financial feet, this predictability is invaluable.

Protection From Rate Rises

With the RBA’s February 2026 increase and economists forecasting further hikes, locking in a fixed rate could save you thousands if variable rates continue to climb.

Simple Financial Planning

When you know your exact repayment amount for the next 3-5 years, it’s easier to budget for renovations, school fees, or that holiday you’ve been planning.

Limitations of Fixed Rates

Less Flexibility

Most fixed-rate loans restrict extra repayments to around $10,000-$30,000 per year. If you receive a work bonus or inheritance and want to pay down your loan faster, you’ll hit that cap quickly.

High Break Fees

 If you need to sell your property, refinance to a better rate, or pay off your loan early during the fixed period, you could face break costs ranging from a few thousand to tens of thousands of dollars. These fees compensate the lender for their financial loss when you exit the fixed rate early.

Missing Out On Rate Cuts

If the RBA starts reducing the cash rate again (as it did in 2025 with three cuts), you’re stuck paying your fixed rate while variable rate borrowers enjoy lower repayments.

Limited Loan Features 

Most fixed-rate loans don’t offer offset accounts or redraw facilities during the fixed term. Those are powerful tools for reducing interest costs, and you give them up when you fix them.

When to Choose a Variable Rate Mortgage

Variable Rate Benefits

Maximum Flexibility

You can make unlimited extra repayments without penalty, helping you smash through your loan balance faster. On the Gold Coast’s strong property market, where values increased approximately 18% in 2025 alone, building equity quickly gives you options.

Offset Accounts

Variable rates typically come with offset accounts. If you keep $30,000 in your offset account, you only pay interest on your loan balance minus that $30,000. For a $600,000 loan at 6.5%, that offset balance could save you around $1,950 per year in interest.

Rate Cuts

You’ll also benefit from rate cuts immediately. When the RBA reduced rates three times in 2025, variable rate borrowers saw their repayments drop each time.

Redraw Facilities

Redraw facilities let you access extra repayments you’ve made if you need cash for emergencies or opportunities. It’s like a financial safety net built into your loan.

Variable Rate Drawbacks

Repayment Uncertainty

When the RBA hiked rates by 0.25% in February 2026, the average monthly repayment on a $600,000 loan increased by about $90. That’s over $1,000 per year.

Budgeting Difficulties 

Variable rates make budgeting harder. You can’t predict your exact repayments 12 months from now, which creates stress for some borrowers.

If you’re stretching your budget to afford your Gold Coast property, rising rates can hurt. Some buyers who maxed out their borrowing capacity during the low-rate period in 2020-2021 are now facing significantly higher repayments as rates have increased.

Fixed or Variable Mortgage: Which is Better for You?

There’s no universal “better” option. The right choice for fixed vs variable home loan in Australia depends entirely on your situation.

Choose Fixed If You:

• Want predictable repayments for budgeting
• Believe interest rates will rise in the short term
• Have a tight budget with little room for rate increases
• Don’t plan to make large extra repayments
• Won’t need to sell or refinance in the next 3-5 years
• Value peace of mind over flexibility

With the RBA raising rates in February 2026 and several economists predicting further increases, many local buyers are fixing to protect themselves. Some major banks have already hiked their fixed rates significantly – CBA’s 3-year fixed rate jumped from 5.34% to 6.04% in January, signalling lenders expect higher rates ahead.

Choose Variable If You:

• Can handle fluctuating repayments in your budget
• Plan to make regular extra repayments
• Want access to offset accounts and redraw facilities
• May need to sell or refinance in the near future
• Believe rates will stabilise or fall over your loan term
• Value flexibility over rate certainty

Consider a Split Loan

Can’t decide between fixed and variable? You can also split your loan. You might fix 60% of your home loan to get rate certainty, while keeping 40% variable to maintain flexibility and offset benefits.

Should I Fix My Home Loan Rate in 2026?

Here’s what’s happening right now in the Australian property and finance landscape:

• The RBA cash rate sits at 3.85% after the February 2026 increase. 
• Inflation has risen to 3.8% annually, sitting above the RBA’s 2-3% target range. 
• With persistent inflation, economists from Australia’s big four banks are divided – some predict the cash rate will hold, while others forecast at least one more hike in 2026.

Meanwhile, lenders are already pricing in higher rates. Fixed rates across the market have jumped significantly since late 2025, suggesting banks expect continued rate pressure.

For Gold Coast buyers specifically, the timing is interesting. The local property market showed remarkable resilience through the February rate rise, with auctions still achieving strong results. Some buyers are rushing to lock in fixed rates now, expecting further increases that would make borrowing more expensive.

If you’re considering fixing your home loan rate, here are the key questions to ask yourself:

1. Can your budget handle another 0.25-0.50% rate increase? That would add roughly $90- $180 per month to a $600,000 loan.
2. How long do you plan to keep this property? If you might sell within 2-3 years, break fees could outweigh any savings from fixing.
3. Do you need loan flexibility? If you’re expecting bonuses, inheritances, or plan to make large extra repayments, a variable might suit you better.
4. What’s your risk tolerance? Some borrowers sleep better knowing their repayments won’t change, even if it costs them a bit more.

If your fixed mortgage is ending soon, now’s the time to review your options carefully. Don’t just roll onto your lender’s standard variable rate – you might find better deals available.

Common Mistakes Buyers Make

Mistake #1: Fixing based solely on current rates

Don’t look only at whether fixed rates are currently lower than variable rates. Consider where rates might move during your fixed period, and whether the certainty is worth the potential for higher long-term costs.

Mistake #2: Ignoring break fees

Life changes. You might need to sell due to a job relocation, relationship breakdown, or financial hardship. Understand your lender’s break fee formula before locking in.

Mistake #3: Fixing their entire loan

A split strategy often works better. Fix enough to give you budget security, but keep some variable to maintain flexibility and offset benefits.

Mistake #4: Not shopping around

Fixed and variable rates can vary significantly between lenders. The difference between a 6.0% and 6.3% rate on a $600,000 loan is about $1,080 per year. Over 30 years, that’s serious money.

Mistake #5: Forgetting about loan features

That slightly higher variable rate might come with a 100% offset account that could save you more than a lower fixed rate without features. Run the numbers properly.

Get Expert Help with Your Home Loan Choice

You don’t have to navigate fixed vs variable home loan decisions alone. Our team has helped hundreds of Gold Coast families find the right home loan structure – whether that’s fixed, variable, or split.

We’ll compare rates and features across 40+ lenders, explain your options clearly, and help you structure a loan that actually works for your situation. Not just today, but throughout the life of your loan.

We’ll walk you through what is best: fixed or variable home loan for your specific circumstances and help you move forward with confidence. Whether you’re buying your first home, upgrading, or investing in the Gold Coast’s booming property market, we’re here to make sure your home loan works as hard as you do.