Should you go for variable or fix your home loan rate in 2026?

Looking to refinance your home loan to beat the rate rise? We take a look at some of the considerations when choosing between a fixed or variable home loan.

Refinancing your home loan can be an effective way to reduce your interest rate and save on overall borrowing costs.

That's something to think about, especially given the Reserve Bank of Australia's recent movements.

But there can be quite a lot of difference between different types of home loans.

So before you choose to refinance, it's important to decide whether you're looking for a fixed rate or variable rate home loan.

BCU Bank offers both types of loans. Today, we're taking a look at some of the key differences and benefits.

Refinance with BCU Bank

The OMG Home Loan (variable)

A variable home loan offers a variable interest rate. Although they usually shift in line with RBA cash rate changes, they can also go up or down at any time throughout the lifetime of the loan.

It's an attractive option for many refinancers as it allows the borrower to benefit from rate decreases. However, it can also mean that refinancers pay more overall if interest rates increase.

So it's important to look at the interest closely. BCU Bank offers competitive variable interest rates, including the OMG Home Loan from BCU Bank, which is intended for owner-occupiers.

Tiered interest rates also allow refinancers to benefit from a lower rate when they borrow less.

Additionally, variable home loans tend to include more features.

For example, refinancing to a variable home loan with BCU Bank also gives you access to unlimited additional repayments without any penalties.

This can help reduce the cost of the loan over its lifespan, as you're reducing the principal and the overall interest paid.

You can also choose to repay the loan on a weekly, fortnightly or monthly basis, to better suit your pay cycle.

There are no ongoing fees or charges with a BCU Bank variable home loan, which can lead to significant savings over the course of the loan.

And of course, if you're ahead on your repayments, you can also use redraw if you need to access additional funds.

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Fixed Rate Home Loan

Fixed rate home loans allow you to "fix" your interest rate for a specific amount of time. This will vary depending on the type of loan and your lender, but 1-5 years is a good rule of thumb.

These types of loans are attractive to refinancers as they allow you to lock in your home loan repayments.

This can make budgeting easier and help relieve financial stress in both the short and long term. Additionally, a fixed home loan with BCU Bank allows you to pick your repayment schedule to accommodate your personal circumstances.

You can see BCU Bank's current fixed rate on the BCU Bank website.

These loans have no ongoing fees or charges, and you're also able to borrow up to 95% of the property value* for owner-occupied purposes

Additionally, you can make up to $25,000 in extra repayments during fixed period without any penalties.

Leveraging a lower interest rate and loan features effectively can allow you to get your loan paid off more rapidly and reduce your overall borrowing costs along the way.

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Learn more about refinancing with BCU Bank

Banking and credit products are issued by Police & Nurses Limited (BCU Bank) ABN 69 087 651 876 AFSL and Australian Credit Licence 240701.

Any advice provided does not take into account your objectives, financial situation or needs. You should read the relevant Product Terms and Conditions before acquiring any product and consider whether it is right for you.

Target Market Determinations (TMDs) are available on our website or upon request.

*If you are borrowing more than 80% of the property's value (Loan to Value Ratio), Lenders Mortgage Insurance (LMI) may be required. Borrowing up to 95% includes LMI costs.