What is a split loan?
A split loan is a mortgage divided into two or more portions, typically one at a fixed interest rate and one at a variable rate, allowing borrowers to benefit from both rate certainty and refinancing flexibility.
A split loan divides a single mortgage into separate portions, each with its own interest rate structure. The most common structure pairs a fixed-rate component with a variable-rate component, though some borrowers split between multiple variable rates or use other combinations.
The fixed portion locks in a specific rate for an agreed term, usually three to five years. This portion provides certainty about repayments during that period, protecting the borrower if rates rise. The variable portion tracks market conditions and moves with the lender's rate changes, typically offering a lower starting rate than fixed alternatives.
the team in Sydney use split loans to reduce risk without sacrificing opportunity. When rates are unpredictable, the fixed slice shields part of the loan from rate movements. The variable slice remains accessible for extra repayments, redraw facilities, or rate refinancing if market conditions shift favorably. This flexibility appeals to households whose circumstances may change or who want to avoid being locked into a fixed rate for the full loan term.
Split loans also suit borrowers who believe rates may fall. Rather than committing entirely to fixed rates, they keep a variable portion to capitalize on potential decreases. Conversely, borrowers worried about rising rates use the fixed component as insurance. A mortgage broker can help structure a split loan to match your circumstances and expected rate environment.