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Split Loan Calculator

Not sure whether to go with a fixed rate home loan, a variable rate home loan, or a mix of the two? Use Split Loan Calculator to show the differences in repayment amounts and interest payable over the life of the loan.

What is a Split Loan?

A split loan is a mortgage option that provides borrowers with the opportunity to divide their home loan into distinct parts, each featuring different interest rates, repayment terms, and unique features.

Typically, a split loan consists of a fixed-rate section and a variable-rate section. The fixed-rate section allows borrowers to make consistent payments for a specified period of time, while the variable-rate section enables them to benefit from rate cuts and potentially pay off their loan more quickly.

With a split loan, borrowers have the freedom to allocate their loan amount between the fixed and variable sections based on their individual needs and preferences.

For example, a borrower may opt for a 70/30 split, with 70% of their loan at a fixed rate and the remaining 30% at a variable rate. This flexibility can be advantageous in an environment where interest rates are subject to change.

Benefits of Split Loans

    1. Flexible repayments

Split loans enable borrowers to divide their loan amount into different portions, each with different repayment terms. This provides borrowers with greater flexibility and can make it easier to manage their finances.

For example, a borrower with a $500,000 home loan can split it into a $300,000 fixed-rate portion and a $200,000 variable-rate portion, with different repayment terms that suit their needs.

    1. Protection against interest rate hikes

With a split loan, borrowers can lock in a portion of their loan at a fixed rate, protecting them from potential interest rate increases. This can provide greater peace of mind and help borrowers manage their budget more effectively.

For example, a borrower may split their $500,000 loan into a 50/50 split, with half at a fixed rate and half at a variable rate, providing some protection against future interest rate hikes.

    1. Access to lower variable rates

A split loan also enables borrowers to take advantage of lower variable rates, potentially reducing the overall cost of their loan. For example, a borrower may split their $500,000 loan into a 70/30 split, with 70% at a fixed rate and 30% at a variable rate, benefiting from any rate cuts.

    1. Greater flexibility

By dividing a home loan into different portions, a split loan offers borrowers greater flexibility to tailor their loan to their specific needs. For example, a borrower with a $500,000 loan can split it into a $200,000 fixed-rate portion to provide stability and a $300,000 variable-rate portion for flexibility and access to lower rates.

    1. Potential for faster loan repayment

With a split loan, borrowers can potentially pay off their loan more quickly by using any savings generated from lower variable rates to make additional payments on the fixed-rate portion.

For example, a borrower may split their $500,000 loan into a 60/40 split, with 60% at a fixed rate and 40% at a variable rate, using the savings generated from lower variable rates to make additional payments on the fixed-rate portion, paying off their loan more quickly.

Need More Advice About Split Loans?

If you’re considering split loans as an option, it may be helpful to consult with an Excellence Finance Mortgage Broker.

Disclaimer:

It’s important to keep in mind that the calculations provided by split loan calculators may not include all fees and charges. These results are only estimates and should not be the sole basis for making a loan decision. As interest rates and costs can vary over time, it’s recommended that borrowers seek advice from a qualified Australian Credit Licensee or Authorised Credit Representative, taking into account their specific circumstances.

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