A: With most types of home loans you can choose either a fixed or a floating (i.e. variable) interest rate. Revolving credit home loans and offsetting home loans have a floating interest rate.

(1) Fixed Interest Rate: A fixed interest rate will not change during the period (term) of the fixed rate that you choose. At the end of your fixed interest rate term you can either choose a new one from the rates available at that time, or change to a floating interest rate.

(2) Floating Interest Rate: A floating (i.e. variable) interest rate will go up or down as interest rates in the wider market change. You can change to a fixed interest rate at any time, although some types of loans are only available with a floating interest rate.

(3) Combined Interest Rate: Some people will split the amount they borrow between two separate loans, one with a fixed interest rate and the other with a floating rate.