The Easiest Way to Lock In Your First Home Rate

Locking in a rate gives you payment certainty, but timing matters

A fixed rate loan holds your interest rate steady for an agreed period, usually between one and five years. Your repayments stay the same regardless of what happens in the broader economy. For first home buyers in Wangaratta working out their weekly budget, that predictability can be valuable. But fixed rates come with conditions that limit how much extra you can pay, and breaking the loan early can trigger a cost.

Most first home buyers applying for a home loan through Empire Finance will look at a split structure rather than fixing the entire amount. That gives you the stability of a fixed portion alongside the flexibility of a variable portion with an offset account.

How fixed rates differ from variable rates for first home buyers

A variable rate moves in line with lender pricing decisions, which are influenced by the Reserve Bank and funding costs. When rates rise, your repayments increase. When rates fall, your repayments drop. Variable loans generally allow unlimited extra repayments and full access to features like offset accounts and redraws.

A fixed rate locks in your repayment amount for the chosen period. You cannot access an offset account on the fixed portion, and most lenders cap extra repayments at around $10,000 to $30,000 per year depending on the loan size. If you want to sell the property, refinance, or pay out the loan during the fixed period, the lender may charge a break cost. That cost reflects the difference between the rate you locked in and the rate the lender can now lend that money at.

Consider a buyer who fixes $400,000 at 5.89% for three years, then needs to sell after 18 months because of a job relocation. If rates have dropped and the lender is now offering 4.79% for the remaining term, the break cost could run into the thousands. That cost is calculated using a formula set out in the loan contract, and it is not always predictable at the time you fix.

Splitting your loan between fixed and variable

A split loan divides your borrowing into two portions. You might fix 60% of the loan and leave 40% variable, or choose a different ratio depending on your priorities. The fixed portion gives you certainty over part of your repayment, while the variable portion lets you make extra repayments and use an offset account to reduce interest.

In our experience working with first home buyers around Wangaratta, a split structure suits buyers who want some repayment certainty but also plan to use their offset account to hold savings or irregular income. Rural and regional buyers often have income that fluctuates with seasonal work or contract roles, and the variable portion allows them to pay down the loan faster when income is higher without triggering a break cost.

The split ratio is not locked in forever. When the fixed portion expires, you can choose to refix part or all of it, move the full balance to variable, or adjust the split based on what rates are doing at the time.

Fixed rate options under the Australian Government 5% Deposit Scheme

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. The scheme operates through a panel of 31 participating lenders, and not all of them offer the same range of fixed rate products.

Some lenders on the panel will allow you to fix part or all of your loan under the scheme. Others only offer variable rates to applicants using the guarantee. If you want to use the 5% deposit option and lock in a fixed rate, your broker will need to approach lenders who support both.

Property price caps for the scheme in regional Victoria were increased from 1 October 2025, and Wangaratta falls within the regional classification. The current cap sits well above the median house and unit values in the area, so most first home buyers purchasing in town will fall within the scheme's property limits.

What happens when your fixed rate expires

When the fixed period ends, your loan automatically moves to the lender's standard variable rate unless you take action. That rate is usually higher than the advertised variable rate for new borrowers, so refinancing or renegotiating at expiry is common.

You will receive a notice from your lender around 30 to 90 days before the fixed period ends. At that point, you can choose to refix at the current fixed rate, switch to a variable rate with the same lender, or refinance to a different lender if better pricing is available elsewhere. If rates have fallen since you first fixed, moving to a variable rate or refinancing might reduce your repayments. If rates have risen, you might prefer to refix for another term.

Some buyers assume they are locked in with their original lender once the fixed term is over. You are not. The expiry of a fixed rate is one of the most common points at which borrowers switch lenders, particularly if they have built up equity and can now access better pricing or remove any remaining Lenders Mortgage Insurance.

Accessing stamp duty concessions and grants alongside a fixed rate loan

Victoria offers first home buyers a full stamp duty exemption on properties up to $600,000 and a sliding concession on properties between $600,001 and $750,000. The First Home Owner Grant of $10,000 applies to new homes valued up to $750,000. These concessions apply regardless of whether you choose a fixed rate, variable rate, or split loan structure.

You can combine the stamp duty concession, the First Home Owner Grant, and the Australian Government 5% Deposit Scheme in a single transaction. The loan structure you choose does not affect your eligibility for any of these.

Most properties in Wangaratta sit below the $600,000 threshold, which means many local first home buyers pay no stamp duty at all. That saving can be redirected into your deposit, reducing the amount you need to borrow or increasing the buffer you hold in your offset account once you settle.

Prepayment limits and break costs

Fixed rate loans typically allow you to make extra repayments up to a set limit each year without penalty. That limit varies by lender but is commonly between $10,000 and $30,000 annually. If you exceed the limit, the lender may charge a fee or treat the excess as an early repayment and calculate a break cost.

Break costs are not charged as a flat penalty. They are calculated using the difference between your fixed rate and the current wholesale rate the lender can achieve for the remaining fixed period. If rates have fallen, the break cost can be significant. If rates have risen, the break cost may be zero or minimal.

This is one reason why many first home buyers lean toward a split loan rather than fixing the full amount. The variable portion absorbs extra repayments without restriction, while the fixed portion provides certainty over part of the loan. If your circumstances change and you need to sell or refinance, you only face a potential break cost on the fixed portion rather than the full loan balance.

Pre-approval and rate locks for first home buyers

Pre-approval gives you conditional approval for a loan amount before you make an offer on a property. It confirms your borrowing capacity and shows sellers that you can proceed. Pre-approval does not lock in an interest rate. Rates are locked separately, and the lock period is usually 90 days from the date you apply.

If you want to lock in a fixed rate, you typically do so once you have a signed contract. Some lenders allow you to lock a rate at pre-approval stage, but that lock will expire if you do not find a property within the lock period. Once the lock expires, you will be offered whatever the current rate is at the time you proceed.

Rate locks are particularly relevant in a rising rate environment. If you exchange contracts and rates are climbing, locking in your fixed rate quickly can save you from a higher rate by settlement. The reverse is also possible. If rates are falling, locking in too early means you miss the benefit of the drop.

Using your offset account on the variable portion

An offset account is a transaction account linked to your home loan. Every dollar in the offset reduces the balance on which interest is calculated. Offset accounts only work with variable rate loans. You cannot offset against a fixed rate portion.

In a split loan, your offset account reduces interest on the variable portion only. If you fix 60% of your loan at $360,000 and leave 40% variable at $240,000, an offset balance of $20,000 will reduce the interest charged on the $240,000 portion. The fixed portion continues to accrue interest on the full $360,000.

For buyers in Wangaratta who have irregular income or receive seasonal bonuses, the offset account on the variable portion allows you to reduce interest whenever your account balance is high, without needing to commit those funds permanently to the loan.

We work with buyers across Wangaratta and the Ovens Valley

Empire Finance meets with clients in Wangaratta and surrounding areas including Milawa, Oxley, and Glenrowan. We work with first home buyers who are purchasing in town close to the CBD and Wangaratta Base Hospital, as well as those looking at rural residential blocks on the outskirts. The mortgage broking process starts with a conversation about your deposit, your income, and what you are looking to buy. From there, we match you with lenders whose fixed rate products and loan features suit your situation.

Call one of our team or book an appointment at a time that works for you. We will go through your options, explain how fixed and variable rates compare for your specific borrowing amount, and help you structure a loan that fits your budget and your plans.

Frequently Asked Questions