Split Home Loans Explained
A split home loan divides your mortgage into fixed and variable rate portions, offering repayment certainty alongside features like offset accounts and extra repayments.
What is a split home loan?
A split home loan allows you to divide your total mortgage into separate portions, typically combining a fixed interest rate with a variable interest rate. Instead of choosing one loan structure for your entire balance, you can assign a percentage to remain fixed for a set term—such as one to five years—while the remaining balance moves with market rate fluctuations.
This dual structure provides a balance between stability and flexibility. The fixed portion protects part of your loan from interest rate rises, giving you predictable repayments. Meanwhile, the variable portion lets you access features like an offset account, a redraw facility, or the ability to make unlimited extra repayments to pay down your debt faster.
Lenders usually allow you to choose the split ratio that suits your household budget, such as 50/50, 70/30, or 80/20. However, it is important to check whether splitting your mortgage incurs multiple ongoing monthly account fees or limits your ability to make early repayments on the fixed portion without incurring break costs.
Working with a Lonix broker makes it simple to compare split loan options across multiple Australian lenders. Your broker can help calculate an effective split ratio for your financial situation and structure the loan to maximise flexibility while keeping borrowing costs down.
Related questions
- What ratio should I use to split my home loan?
- There is no set rule, but borrowers commonly choose ratios like 50/50, 60/40, or 70/30 based on how much repayment certainty versus flexibility they want. A broker can help evaluate your cash flow to find an appropriate balance.
- Can I have an offset account on a split home loan?
- Yes, most Australian lenders allow you to attach an offset account to the variable portion of your split loan. Offset accounts are rarely offered on the fixed rate portion.
- Are there extra fees for splitting a mortgage?
- Some lenders charge a split fee at setup or charge separate monthly package fees for managing two loan sub-accounts. It is best to review the fee schedule and comparison rate before committing.
- Can I change my split ratio later?
- You can usually adjust your split ratio, but changing the fixed portion before its term ends may trigger break costs. Altering the split is much simpler once the fixed rate period expires.