Split Rate Home Loans
Hedging your bets, the best of both worlds...
The ability to split a home loan into multiple loans that allows for a combination of both variable and fixed rates.
If you are unsure whether to go variable or fixed rate loan then a split loan is something to consider.
Split loans are a combination of variable and fixed rate loans. You can have a percentage of the loan as variable while the other percentage fixed. You can have half fixed and half variable, 70% variable and 30% fixed or any combination you prefer.
These loans are for borrowers who want to hedge their bets. They give the borrower the flexibility of a variable loan and the security of a fixed loan. Generally, taken out when the direction of interest rates are rising or when they have no clear direction.
Advantages
Having part of you loan fixed protects against interest rate rises.
If interest rates fall you also get the benefit of lower mortgage repayments.
Additional repayments can be made into the variable portion as most lenders do not allow for extra repayments
into fixed rate loans.
Ability to use an offset account and redraw facility with the variable portion of the loan.
Disadvantages
Cost of two loans may incur unnecessary fees such as set up and ongoing fees.
Paying or exiting the fixed loan early can incur break fees.
Which Lenders Will Do Split Loans?
Each lender has their own version of a split loan. Some of the ways you can split a loan with various lenders can be as follows;
Two separate loan accounts. This can prove to be expensive way to get a split loan.
One loan split between variable and fixed loan with one application and ongoing fee for both.
Professional packages allow for multiple loans with nil upfront fees for one annual fee.
Which ever one you choose largely depends on the loan amount and your lending need.
Hedging your bets, the best of both worlds...
The ability to split a home loan into multiple loans that allows for a combination of both variable and fixed rates.
If you are unsure whether to go variable or fixed rate loan then a split loan is something to consider.
Split loans are a combination of variable and fixed rate loans. You can have a percentage of the loan as variable while the other percentage fixed. You can have half fixed and half variable, 70% variable and 30% fixed or any combination you prefer.
These loans are for borrowers who want to hedge their bets. They give the borrower the flexibility of a variable loan and the security of a fixed loan. Generally, taken out when the direction of interest rates are rising or when they have no clear direction.
Advantages
Having part of you loan fixed protects against interest rate rises.
If interest rates fall you also get the benefit of lower mortgage repayments.
Additional repayments can be made into the variable portion as most lenders do not allow for extra repayments into fixed rate loans.
Ability to use an offset account and redraw facility with the variable portion of the loan.
Disadvantages
Cost of two loans may incur unnecessary fees such as set up and ongoing fees.
Paying or exiting the fixed loan early can incur break fees.
Which Lenders Will Do Split Loans?
Each lender has their own version of a split loan. Some of the ways you can split a loan with various lenders can be as follows;
Two separate loan accounts. This can prove to be expensive way to get a split loan.
One loan split between variable and fixed loan with one application and ongoing fee for both.
Professional packages allow for multiple loans with nil upfront fees for one annual fee.
Which ever one you choose largely depends on the loan amount and your lending need.