Top tips to lock in a fixed rate and keep repayments up

A fixed rate locks in certainty, but the trade-off you're usually told about is flexibility.

That matters when you work shifts. If you pick up a night shift or overtime in a pay cycle and want to put the extra toward your mortgage, you need a loan that lets you do that without penalty. Most fixed rate loans cap how much extra you can pay each year, and some lenders won't let you pay ahead at all. The right structure gives you rate protection and the option to chip away at the balance when your roster and budget line up.

Fixed Rate Extra Repayment Limits: What Queensland Police Need to Know

Most lenders allow up to $10,000 in additional repayments per year on a fixed rate loan without charging a break fee. Some lenders allow $20,000 or $30,000. The limit resets each year of the fixed term. If you exceed the cap, the lender will calculate a break cost based on the rate difference and the time left on your fixed period. That cost can run into thousands of dollars if rates have dropped since you fixed.

Consider a Queensland Police officer fixing a portion of their loan at 5.89% for three years. They pick up regular overtime and want to throw an extra $15,000 at the loan over the first 12 months. If their lender's cap is $10,000, the extra $5,000 will trigger a break fee. If they split the loan and leave part variable, they can direct the overflow to the variable portion and avoid the penalty entirely.

Split Loan Structures: How to Keep Rate Certainty and Repayment Flexibility

A split loan divides your borrowing into two or more portions. You fix one part for certainty and leave the other on a variable rate. The variable portion gives you unlimited extra repayment capacity and access to an offset account if the loan includes one. You make one repayment to the lender, and they allocate it across both loans according to your instruction.

In our experience, Queensland Police who work rotating rosters tend to split 50/50 or 60/40 in favour of the fixed portion. That gives them protection on the majority of the loan and enough variable debt to absorb extra repayments without hitting the fixed cap. The structure also means that if rates drop, part of your loan benefits immediately. If rates rise, part of your loan is protected. You're not betting the whole mortgage on one outcome.

Offset Accounts vs Redraw on the Variable Portion

The variable portion of a split loan usually comes with either an offset account or a redraw facility. An offset account is a transaction account linked to your loan. The balance in the account reduces the interest charged on your loan without technically being part of the loan itself. If you have $20,000 in offset and a $400,000 variable loan, you're only charged interest on $380,000. You can access the offset funds anytime without approval.

A redraw facility lets you pull back extra repayments you've already made into the loan. Some lenders charge a fee per redraw, and some require a minimum redraw amount. Others limit how many redraws you can make in a year. If you're putting extra repayments into the variable side of a split loan and you might need that money back for settlement costs, an offset account is the safer option. The money stays in your control, and there's no approval step.

Queensland First Home Buyer Concessions and Low Deposit Structures

Queensland first home buyers purchasing an established home pay nil transfer duty up to $700,000 and receive a concession up to $800,000. If you're buying a new home, you receive a full transfer duty concession with no price cap from 1 May 2025. The First Home Owner Grant is $15,000 for new homes valued under $750,000 for contracts signed from 1 July 2026. The grant does not apply to established homes.

If you're buying with a 5% deposit under the Australian Government 5% Deposit Scheme, you can still structure your loan as a split. The scheme guarantees the gap between your deposit and 20% of the property value, so you avoid paying Lenders Mortgage Insurance. The Brisbane property price cap under the scheme is $1,000,000. Regional Queensland caps are higher in some areas and lower in others. You apply through a participating lender, not directly through Housing Australia. A split structure can be set up at settlement, so your fixed and variable portions are in place from day one.

Pre-Approval and Application Timing for Split Loans

A split loan doesn't add time to your home loan application. The lender assesses your borrowing capacity once and approves the total amount. You choose the split ratio and the fixed term when you submit the application or when you're ready to proceed to formal approval. Some lenders let you lock in your fixed rate at pre-approval. Others require you to lock it in closer to settlement. If rates are moving, that timing matters.

Queensland Police often apply for pre-approval while they're still searching for a property. That gives you a clear budget and a conditional approval you can show to a selling agent. Once you've signed a contract, you return to the lender to confirm the split and lock the fixed rate. The formal approval and valuation follow, and the loan settles on the agreed date. If your deposit structure includes a guarantor arrangement, the lender will require additional documentation and a separate guarantee deed signed by the guarantor before settlement.

When to Avoid Fixing Part of Your Loan

If you're planning to sell or refinance within two years, a fixed rate loan can cost you more than it saves. Break fees apply when you exit a fixed loan early, and those fees are calculated on the economic loss to the lender. If you fixed at 5.89% and the lender can only replace that loan at 5.39%, they've lost income over the remaining term. You pay the difference. That can amount to several thousand dollars depending on the rate gap and the time left.

Some Queensland Police are posted to regional stations and expect to move again within a few years. If that applies to you, a variable loan with no fixed portion and no exit fees gives you more flexibility to sell or refinance without penalty. You lose the rate certainty, but you're not locked into a structure that could cost you thousands to unwind. If you're unsure, a shorter fixed term of one or two years reduces your exposure to break costs while still giving you some rate protection.

Call one of our team or book an appointment at a time that works for you. We'll run the numbers on a split structure that fits your deposit, your roster, and your repayment capacity, and we'll make sure the loan you're applying for lets you pay extra when you're able to without costing you more than it should.

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