Split Loans - Part Fixed & Part Variable Interest Rate

This loan is a way of hedging your bets with the interest rates. If you are unsure as to whether interest rates are going up or down, you can choose a Split Rate Loan. With this type of loan, you nominate how much of the loan you would like to fix and how much you would like to put on a variable rate.

The Split Loan is a cautious way of borrowing for your home.

Advantages

• Having part of your loan at a fixed interest rate protects you against interest rate rises.
• Leaving part of your loan on variable interest rate leaves you less vulnerable if rates reduce.
• You are able to make additional payments on the variable portion of the loan.

Disadvantages

• You may not benefit as greatly from any interest rate fluctuations.
• You may be charged account fees on both the fixed portion and the variable portion.
• You may be penalised for making higher repayments or fully pay off the fixed portion.