Understanding Split Rate Home Loans

Split rate home loans are loans that allow you to split your home loan into multiple loan accounts that attract different interest rates.

A common example is to split your home loan to obtain a variable interest rate on one portion of the loan and a fixed rate on the other.

For example, if you require a loan amount of $350,000, you can decide to split your loan with $250,000 at a variable interest rate and the remaining $100,000 at a fixed interest rate. You will have the flexibility a variable rate loan offers, while still enjoying the interest rate certainty of a fixed rate on a portion of the loan.

Benefits of a split loan

• Split rate home loans are a comfortable compromise that allows you to enjoy the benefits of both types of mortgages—variable and fixed—at the same
• The fixed rate portion of a split loan offers you some security and protection against sudden interest rate rises.
• The variable rate portion of a split loan provides flexibility and allows you to take advantage of decreases in interest
• You can often make extra repayments on the variable portion of the home loan, which could help you pay it off
• If you choose a variable and fixed portion split, your variable portion can have additional benefits such as an offset account or a redraw
• There are no restrictions on how you split your home loan. For example, you can split your home loan down the middle 50/50, or you can split it 30% variable and 70% However, most lenders only allow two splits.

Things to consider

• You may miss out on potential savings on the fixed portion of your loan if interest rates should
• You will pay more on the variable portion of your loan if interest rates
• There may be additional costs associated with this type of
• If you need to pay out the loan early within the fixed term, early repayment costs will be
• Consider where you want to be in the next five This will help you choose a loan with features suitable to your goals and objectives.