Split rate (principal and interest) loan

A split rate loan lets you divide your home loan between fixed and variable rate components. This can be a way to enjoy the best of both worlds – the certainty of a fixed rate and the flexibility and features of a variable rate loan.

What is a split rate loan?

A split rate loan lets you divide your home loan between fixed and variable rate components.

This can be a way to enjoy the best of both worlds – the certainty of a fixed rate and the flexibility and features of a variable rate loan.

What are the pros and cons of a split rate loan?

Pros:

  • Provides some peace of mind for borrowers concerned about rate rises
  • Provides more certainty in budgeting than full variable loans
  • Can make additional payments on variable portion of the loan

Cons:

  • Allows limited additional payments only
  • Repayments will rise with rate rises on the variable part of the loan
  • If interest rates fall, repayments on the fixed rate portion of the loan will remain at the higher fixed amount
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