The term refers to dividing your home loan into two or more loans. It is a loan arrangement where you can have both fixed and variable interest rates on your loan at the same time. As the name implies, you split your home loan into portions and allocate either a variable or fixed interest to each one.

To further illustrate a split home loan, here is an example:

Let’s say you have acquired a home loan for $200,000. An option you can look at is, dividing your loan into two portions, $150,000 and the other $50,000.

Okay, but why would I do that?

If you like the benefits of a variable rate home loan but still appreciate the certainty of a fixed rate home loan, you could get the best of both worlds by splitting your loan.

Strategic planning can give you security in the home loan market whilst at the same time keeping the flexibility of making extra repayments and redraws.

There are a lot of different options with split loans and every situation is different depending on each individual’s needs.

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