Combination Split Home Loan

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Combination or split home loans

Split loans allow borrowers to take part of their loan as a variable rate loan and the other part as a fixed-rate loan (split however you like). While the overall loan amount is considered “a total”, each part is treated separately for loan contract purposes.

Pros	Cons
Borrowers have the opportunity to hedge their bets in times of rising interest rates and gives a blend of repayment flexibility and interest rate security.	Variable portion is still vulnerable to interest rate rises. If interest rates rise, repayments on the variable portion also rise.

How fixed rates work

Most people did not understand that variable rate movements and fixed rate movements do not come from the same source. They are certainly linked, but the drivers are totally different. Variable rates are driven by Reserve Bank policy; fixed rates are driven by the views of those that put their money out to the fixed rate wholesale market.

How variable rates work

Variable rates are driven by Reserve Bank policy and the cost of funds, while fixed rates are driven by the views of those that put their money out to the fixed rate wholesale market. The Reserve Bank sets policy based on a range of economic indicators as they use interest rates to manage people’s expenditure and thereby the economy.

More information or comparison

If you would like to talk to us confidentially about your options, email us the form below or call at any time on 13 XINC (13 9462) or direct on +61 2 9249 3739 .