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A split rate home loan is a loan that allows 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 loans are a comfortable compromise that allows you to enjoy the benefits of both types of mortgages—variable and fixed—at the same time.
  • 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 rates.
  • You can often make extra repayments on the variable portion of the home loan, which could help you pay it off sooner.
  • If you choose a variable and fixed portion split, your variable portion can have additional benefits such as an offset account or a redraw facility.
  • 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% fixed. 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 fall.
  • You will pay more on the variable portion of your loan if interest rates rise.
  • There may be additional costs associated with this type of loan.
  • If you need to pay out the loan early within the fixed term, early repayment costs will be charged.
  • Consider where you want to be in the next five years. This will help you choose a loan with features suitable to your goals and objectives.


Download our Split Loan Fact Sheet here

Vincents Lending Solutions Pty Ltd ABN 69 848 383 535 | Credit Representative 509289 is authorised under Australian Credit Licence 389328 Disclaimer: The information provided is of general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Vincents Advisor before you make any decision regarding any products and services mentioned in this communication. Liability limited by a scheme approved under Professional Standards Legislation other than for acts or omissions of financial services licensees.

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