There are several different types of home loans, and it’s important to consider which one is right for you and your lifestyle.
A split loan is a home loan option you can choose. Before we explain a split loan, we need to explain fixed home loans and variable home loans. Let’s break it down.
What is a fixed home loan?
A fixed home loan has a fixed interest rate, meaning it will remain the same for a specific period of time. This time depends on how long you choose to fix the loan for (at People’s Choice you can choose between 1-5 years), and the rate will vary depending on the number of years you choose. Having a fixed rate means your repayments won’t change, which can be helpful for budgeting and peace of mind. If interest rates increase then you’ll be fortunate enough to keep your current rate within the fixed period, but if interest rates fall you won't be able to take advantage of the reduced rate.
Fixed home loans typically have fewer features. For example, you’re usually limited in the amount of extra repayments you can make and are not able to redraw during the fixed loan period. In some cases, you may have to pay 'break costs' if you prepay amounts on the loan.
What is a variable home loan?
A variable home loan has a variable interest rate that moves in line with the market. This means your repayment amounts may change over time. Rates may rise or fall, which will cause a change to your repayment amount. The change may or may not be to your advantage – this is the risk you take by choosing a home loan with a variable interest rate.
Variable home loans also tend to allow for greater additional repayments so you can pay off your loan sooner. Many variable rate home loans also offer an offset account so you can use your savings to reduce the amount of interest you pay.
What is a split loan?
A split loan is where you can choose a fixed interest rate for part of your loan amount and a variable interest rate for the rest. The fixed portion helps to protect you from rate rises while the variable portion allows you to pay off some of your loan sooner, and benefit from any falls in interest rates.
Features of our split loans
- No additional fee for splitting your loan
- Make unlimited extra repayments on the variable portion of your loan
- Offset account option
- Redraw facility on variable portion
- Rate lock facility for fixed portion
- Enjoy the certainty of fixed repayments for your fixed portion
- Flexible repayment frequency - pay weekly, fortnightly or monthly
- Loan terms up to 30 years
Applying for a split loan
- Yes. Speak to a Home Loan Adviser to discuss your options.
- A split loan is where you can choose a fixed interest rate for part of your loan amount and a variable interest rate for the rest. The fixed portion helps to protect you from rate rises while the variable portion allows you to pay off some of your loan sooner, and benefit from any falls in interest rates.
- No. There are no additional fees for splitting your loan.
- This will depend on the home loan you have. Speak to a Home Loan Adviser to discuss your options.