The advantage of a fixed-rate loan is that your finances are not affected if the interest rate rises. You can predict for the agreed period exactly what your home mortgage will cost you. The disadvantage is that your expenses will not go down if the interest rate goes down. It is important to be aware that you have committed to paying the fixed interest rate throughout the agreed lock-in period, even if the base interest rate is reduced. Therefore, consider a fixed-rate loan if you’re think long-term and want predictability for your finances. Alternatively, you can combine fixed and variable interest rates. This gives you the predictability of a fixed rate loan, while also giving you exposure to movements in the variable rate, and full flexibility to make extra payments or fully pay off the variable rate portion of the loan. If you come out of the agreement before the end of the lock-in, you risk having to pay a premium (or penalty), which in turn will lead to increased total costs.