A split home loan may suit people who are looking to find a balance between the different loan types.
On the fixed interest rate portion of your loan, you have the certainty of knowing your payments will remain the same for the fixed rate period, so it’s easier to budget.
The variable interest rate portion of your loan gives you the flexibility to make extra payments at any time without cost, so you can pay off your home loan faster and save on interest.
The revolving credit portion gives you the convenience of repaying and redrawing funds, up to your credit limit, as you need them.
By splitting the amount you borrow into multiple loans, you can create the balance you want between certainty, flexibility and accessibility.
With part of your loan set up as a fixed interest rate loan you can lock in an interest rate for a set period from 6 months up to 5 years.
Because the interest rate doesn’t change, you make payments of the same amount fortnightly or montly during the selected fixed rate term.
With a floating interest rate loan, you have the flexibility to increase your payments, make extra payments and repay this portion of your loan at any time, without incurring early repayment adjustment costs. Within a floating interest rate loan, your payments will go up or down as interest rates change.
A revolving credit home loan option works like a combined transaction, savings and home loan account.
You have a maximum credit limit and your monthly payments are interest-only. You can then repay and redraw funds up to your limit whenever you need them.
You can choose between a set maximum credit limit or a reducing credit limit to suit your needs.
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