3 Year Fixed Mortgage: Lock In Your Rate Short-Term

Why choose a 3-year fixed mortgage?

A 3-year fixed mortgage offers a strong balance of stability and flexibility in the Australian market. It protects you from medium-term rate rises while giving you the ability to reassess your loan sooner than with longer fixed terms. Key benefits:

• Budget certainty: Repayments stay the same for three years, regardless of RBA decisions.

• Protection from rate hikes: If rates rise, you continue paying the lower fixed rate.

• Medium-term flexibility: You can reevaluate your loan sooner than with 5-year terms—ideal if life changes may be on the horizon.

• Market buffer: Three years of stability lets you ride out short-term volatility before choosing whether to refix or switch to variable.

Choosing the right fixed rate can be complex. HeyNest connects you with an independent broker who compares a wide range of 3-year fixed products to secure the most competitive option.

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How do fixed rates compare to variable rates?

Understanding the differences between fixed and variable rates is essential when weighing a 3-year fixed mortgage.

Fixed rates

• Pros: Guaranteed repayment stability; predictable budgeting.

• Cons: Limited flexibility, break costs for exiting early, no benefit if rates fall.

• Best for: Borrowers wanting certainty or expecting rates to rise.

Variable rates

• Pros: Immediate benefit from rate cuts; flexible extra repayments.

• Cons: Repayments may rise; budgeting is less predictable.

• Best for: Borrowers comfortable with risk or expecting rates to fall.

The right choice depends on your risk appetite and market outlook. With HeyNest, you can connect to an independent broker who models both options and guides you toward the optimal structure.

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Access to many lenders

Compares and negotiates the best market rates for you.

Dedicated, personalized guide every step of the way.

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Standard, often non-negotiable in-house rates.

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What are the potential costs of breaking a fixed rate?

Breaking a 3-year fixed mortgage early, by refinancing, selling or switching to variable, can trigger significant break costs. These compensate the lender for lost interest. Main factors affecting break costs:

• Interest rate differential: If current market rates are lower than your fixed rate, costs are higher.

• Remaining term: The more time left on your fixed period, the larger the fee.

• Outstanding balance: Bigger balances lead to higher break costs.

Because these calculations can be complex and expensive, expert guidance is crucial. HeyNest connects you with brokers who review the fine print and ensure a 3-year fixed mortgage aligns with your long-term financial plans.

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Frequently asked questions

Can I make extra repayments on a 3 year fixed mortgage?

Most fixed-rate loans allow limited extra repayments (usually capped annually). Check the specific lender's policy carefully before fixing.

Will I be charged a fee if I sell my home during the 3-year fixed term?

Yes, selling your home typically requires paying out the loan, which incurs a significant 'break cost' or 'economic cost' if market rates have dropped.

Is a 3 year fixed rate a good option in Australia right now?

This depends entirely on individual financial goals and market forecasts. An independent broker can provide personalised, non-biased advice on current rates and trends.