With a split loan, you effectively have two loan accounts under one mortgage. For example, on a $600,000 loan you might fix $300,000 at 5.89% for two years and keep $300,000 on a variable rate at 6.09%. Each portion has its own repayment schedule.
The fixed portion gives you certainty - your repayments on that portion will not change during the fixed term, regardless of what the Reserve Bank does. The variable portion lets you make unlimited extra repayments, use an offset account, and benefit if rates drop.
Lendology compares 60+ lenders to find the best combination of fixed and variable rates. The ideal split depends on your risk tolerance, how much you have in savings (for offset), and your view on where rates are heading.
The main benefit of splitting is hedging your bets. If rates rise, you are protected on the fixed portion. If rates fall, you benefit on the variable portion. You also retain flexibility for extra repayments and offset on the variable side.
The trade-off is that you do not get the full benefit of either strategy. If rates drop significantly, you would have been better off fully variable. If rates rise sharply, fully fixed would have saved more. A split is a balanced middle-ground approach that suits many Adelaide borrowers.
Jason and Steve are Adelaide mortgage brokers who give honest advice at no cost to you. No obligation.
The information on this page is general in nature and does not constitute financial advice. Given Finance Pty Ltd (t/a Lendology) ACN 624 144 501 is authorised under LMG Broker Services Pty Ltd ACL 517192.