If you would like the stability of a fixed rate home loan along with the flexibility of a variable rate loan, a split loan provides you with the best of both worlds.
A fixed rate home loan has a fixed rate for a scheduled period with set monthly or fortnightly repayments. It isn’t too flexible but if interest rates change, the repayments on a fixed interest loan remain the same. A variable rate home loan has a rate that can vary, as adjusted by the lender, but it is flexible in terms of making additional repayments and paying the loan off early.
With a split loan, you can have part of your loan fixed and part variable to give you the benefits of both loans in a single home loan. You can customise the loan and add the features you require.
When interest rates are volatile or rising, splitting a loan enables you to hedge against the risk of higher rates whilst still keeping part of your loan at the lower variable rate.
