Split Loans | Fixed and Variable Rate Loans

A split loan provides you with the option of locking in interest rates on part of your loan, whilst still allowing for flexibility by keeping part of the loan on a variable rate.  A split loan will still offer flexibility plus added features.  The fixed portion allows you the peace of mind of fixed repayments and the variable portion allows the flexibility of making additional payments and redraw facilities.

Many lenders will even allow a fixed portion and an alternative product to a variable loan, such as a line of credit facility.

We frequently see clients with investment property loans, with a fixed portion, a variable portion and a small line of credit portion.

What are the advantages, and disadvantages?

Advantages

• Having part of your loan at a fixed interest rate protects you against interest rate rises.
• Leaving part of your loan on variable interest rate leaves you less vulnerable if rates reduce.
• Additional payments are allowed on the variable portion of the loan.

Disadvantages

• You may not benefit greatly from any interest rate fluctuations.
• You may be charged set-up fees, account fees and discharge fees on both the fixed portion and the variable portion.
• You may be penalised for making higher repayments on the fixed portion.
• You may be penalised if you pay off your loan before the due date on the fixed portion.

Importantly, everyone’s situation and requirements are different, and you need to choose the right option to suit your own individual situation and budget.

How do you know if a split loan is the right choice for your mortgage and your situation?

Before making a decision about your mortgage, and the type of loan product, call us and make an appointment to speak to one of our professionally qualified mortgage brokers. Not all loans suit every borrower, so it's important to know you're choosing the right lender to suit your needs and banking requirements.

We’re happy to chat with you on the phone, and give advice regardless of whether we can help you, so call us now on 02 4952 9910.