What is a split loan?

A split loan is when you divide your home loan balance into two loan accounts - meaning you can nominate a portion of the loan to have a fixed interest rate and the remainder could have a variable interest rate.

While there are pros and cons to both fixed rate and variable rate home loans, a split loan allows you to hedge your bets and tailor your home loan in a way that works best for you and your financial goals.

Whether you want to get ahead on your variable rate loan with no cap on extra repayments, or are interested in the security of a fixed rate loan, split loans allow you to create the right home loan to suit your needs. 

How does a split loan work?

Keep in mind that a split loan isn’t a separate loan by itself. It involves splitting your home loan balance into two separate accounts – one with a fixed rate and one with a variable rate – and you typically make separate repayments on each.

If you’re applying for a new home loan, you can do this contact H&C Finance on 1800 979 718 and one of our home lending specialists will call you to talk you through the process. For an existing home loan, you might choose  to fix part of all of your variable rate loan balance.

What percentage of the loan is fixed and variable is completely up to you! For example, you may choose a 60:40 split on your $500,000 home loan. Your home loan would then be divided into two separate loans with a fixed interest rate charged on $300,000 and a variable interest rate on the remaining $200,000. If you find your variable rate is going to rise, you can always fix that rate too to lock in certainty. Similarly, if you find you want to switch your fixed rate to variable at the end of its loan term, you can. You can also switch before the end of the fixed rate term if you need to, but keep in mind you may incur break costs.