Lending Hand Finance - Home Loans ( Splitting Your Loan Options)

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Splitting Your Loan Options

Homeowners have been on an uphill ride lately and with three interest rate hikes in 2006 alone it’s no wonder many borrowers locked into fixed rates to protect themselves. Calmer prospects, however, bring with them an opportunity to reboot your home loan’s saving potential where rates are concerned.

Steady interest rates create the perfect environment to test the features and flexibility of your home loan. Loan options, such as splitting your rate, can really make a difference to the overall amount you payback.

Split loans – also called ‘combination loans’– combine the advantages of variable and fixed interest rates into a single loan. The key to split loans is flexibility – you can decide what portion of the loan is fixed or variable to suit your needs and current market conditions. Just remember that the fixed proportion of the loan will be locked in for a set time frame – usually one to five years – and there may be break costs if the loan is repaid early.

With steady interest rates for the foreseeable future, now could be the time to make your move and select a higher variable rate component on your loan: for example: 65 per cent variable, 35 per cent fixed.

Most banks and lending institutions offer fixed and variable rate loan packages – so call your mortgage broker to discuss ways to maximise the different loan features. Here are a number of key considerations:

Why select a split product? Split loans are versatile and can be used for investment and owner-occupied property purposes. Through splitting your loan you get the best of both worlds – the security of a fixed interest rate coupled with the flexibility of a variable rate loan.

Take advantage of variable rates. Higher variable rate loans are suitable for times of economic certainty and unchanged interest rates. This gives you the opportunity to make additional payments to your variable rate loan to suit your needs. The goal? Paying off your overall loan faster!

Did You Know?

We can assist with Split Loans and other loan products.

Contact Lending Hand Finance on
1300 850 545 or

Mortgage & Finance Association of Australia

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Why choose a split loan? Pro - You are protected in times of high interest rates through the fixed rate portion of your loan. Con - Lenders might charge set-up, account, and discharge fees on both portions of the loan.