Do you know Fixed, Variable & Split Loans for Tradies?

What's the Difference Between Fixed, Variable, and Split Loans?

A fixed rate loan locks your interest rate for a set period, usually one to five years. A variable rate loan moves up or down with the market. A split loan puts part of your borrowing on fixed and part on variable.

Most concreters buying their first home ask which one saves them the most money. The answer depends on what you earn, how stable your income is, and whether you plan to throw extra cash at the loan when jobs are paying well. A variable loan gives you full flexibility to make unlimited extra repayments and use an offset account. A fixed loan protects you from rate rises but locks you out of paying down the loan faster without penalty. A split loan tries to do both.

Variable Loans: Pay What You Can, When You Can

Variable loans charge whatever rate the lender sets at the time. If rates drop, your repayments drop. If rates climb, you pay more. The real advantage for concreters is flexibility. You can pay extra when you finish a big commercial pour and pull back to minimum repayments when work slows over winter or during a wet stretch.

Most variable loans include an offset account. This is a transaction account linked to your loan. If you borrow $400,000 and keep $15,000 sitting in offset, you only pay interest on $385,000. The $15,000 stays available for tools, materials, or covering the gap between invoicing and getting paid. For self-employed tradies juggling cash flow, that access matters more than shaving a few basis points off the rate.

Redraw is different. Some lenders let you pull back extra repayments you've already made, but they can change the rules or freeze access. Offset is your money in your account. Redraw is a feature the lender controls.

Fixed Loans: Lock In, Then Sit Tight

A fixed rate loan gives you the same repayment amount for the term you choose, regardless of what happens to rates. You know exactly what you'll pay each fortnight for the next two, three, or five years. That certainty suits buyers who want predictable outgoings or who think rates are about to climb.

The downside is rigidity. Most fixed loans cap extra repayments at $10,000 or $20,000 per year. Go over that and you'll pay break costs, which can run into thousands of dollars. If you sell, refinance, or try to pay the loan off early during the fixed period, the same break costs apply. You also lose access to offset accounts on the fixed portion. Your savings sit in a separate account earning next to nothing while you pay interest on the full loan balance.

Consider a concreter who fixes at what feels like a low rate, then lands a six-month run of high-margin work and wants to pay down $40,000. On a variable loan, that repayment drops straight off the balance and saves interest from that day forward. On a fixed loan, it triggers a penalty that can wipe out most of the benefit.

Split Loans: Hedge Your Position

A split loan divides your borrowing into two portions. You might put 50% on fixed and 50% on variable, or go 70/30, or any mix the lender allows. You get rate protection on part of the loan and full flexibility on the rest.

The structure works if you want some certainty around repayments but still plan to make extra contributions when cash flow allows. The variable portion keeps your offset account active and lets you throw spare income at the loan without penalty. The fixed portion smooths out your baseline repayment and protects you if interest rates jump.

The trade-off is complexity. You're managing two loans with two rates, two sets of terms, and often two redraw or offset arrangements. Some lenders charge two sets of fees. When the fixed term ends, that portion reverts to variable unless you refix, and the rate on offer then might be higher or lower than what you locked in originally.

What Happens When Your Fixed Rate Ends

When a fixed term expires, the loan doesn't disappear. It converts to the lender's standard variable rate unless you actively refix or refinance. Most lenders send a notice 30 to 90 days before the fixed period ends, giving you time to decide whether to lock in again, switch to variable, or move to another lender.

The standard variable rate is usually higher than the discounted variable rate offered to new customers. If you do nothing, your repayments can jump significantly. This is when you either negotiate a better rate with your current lender or refinance elsewhere. Timing matters. If you're still inside the fixed period and try to refix or refinance early, break costs apply. Wait until the fixed term actually ends and you can move without penalty.

Which Structure Suits Concreters Buying Their First Home

Concreters typically work a mix of residential slabs, driveways, and commercial pours. Income can swing depending on weather, site access, and whether you're subbying or running your own jobs. That variability makes offset accounts and repayment flexibility more useful than rate certainty.

If you're buying with a 5% deposit under the federal scheme and your income is solid but uneven, a variable loan with a linked offset account usually makes more sense than fixing. You can park your float in offset when work is steady, and you're not penalised for making lump sum repayments after a string of big jobs. If you're concerned about rate rises and want a fixed baseline repayment, a 50/50 split gives you some protection without locking away all your flexibility.

Fixed loans suit buyers with stable PAYG income who value certainty and don't plan to make extra repayments beyond the annual cap. That's less common among self-employed concreters, but it can work if you're moving from subbying to a salaried site role or if your partner's steady income covers the bulk of the repayment.

How Lenders Assess Your Application for Each Loan Type

Lenders assess your borrowing capacity the same way whether you apply for fixed, variable, or split. They look at your income, existing debts, living expenses, and deposit size. The loan structure you choose doesn't change how much you can borrow, but it does affect how you manage the loan once it's approved.

For self-employed concreters, lenders typically want two years of tax returns and a current business activity statement. If your income is seasonal or project-based, they'll average your earnings and may apply a loading to your living expenses to account for variability. A variable loan with offset doesn't make you look riskier to the lender, and neither does a split. The rate type is a product feature, not a credit assessment factor.

Some lenders offer slightly lower fixed rates than variable rates at certain points in the cycle. Others do the opposite. The difference is usually small, and it shifts constantly. Don't choose a loan structure based on a 0.15% rate difference today if the structure itself doesn't suit how you earn and spend.

Using Offset and Redraw Without Losing Access to Your Deposit Buffer

An offset account holds your savings and reduces the loan balance you pay interest on without actually paying down the loan. This keeps your cash accessible. Redraw lets you pull back extra repayments you've made, but the lender controls the terms and can restrict access, especially if they reassess your financial position.

For concreters, keeping a cash buffer matters. You might need $10,000 to cover materials upfront on a commercial job, or to replace a screed box that's died, or to cover your bills if wet weather kills a month of work. If that $10,000 is in offset, it's yours. If it's in redraw, you're asking permission.

Some lenders treat redraw as a conditional privilege and freeze it if your circumstances change, if you miss a repayment, or if they tighten their credit policy. Offset is a separate transaction account. As long as the loan is current, the money is accessible. That distinction matters more when you're self-employed and your income can move around.

Most first home buyers don't realise offset accounts aren't standard on fixed loans. If you fix the full amount and expect to keep using offset, you'll lose that account for the duration of the fixed term. The money sits elsewhere, earning minimal interest, while you pay interest on the full loan. A split loan solves that by keeping the offset linked to the variable portion.

Call one of our team or book an appointment at a time that works for you. We'll run through your income, your deposit position, and your plans for the next few years, then structure the loan to match how you actually work, not just what sounds good in theory.

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