A split loan is the one, which gives you the possibility of dividing the loan in different parts. With the help of this loan type, you can nominate a loan portion towards the variable interest rate and the remaining to be calculated according to the fixed rate. This will allow the borrower to avail the benefits associated with both the loan types, fixed and variable.

With the selection of the split loan, you can gain the benefits of variable and fixed loans. This will also help in protecting your fixed loan portion from a fluctuating market that can increase the interest rate. You will also be aware of the schedule of you repayments, which will give you the benefit of effective budgeting. From the fixed portion of the loan, you can have the flexibility of additional repayments in an unlimited manner, thereby enabling you to paying the loan faster. The borrower can also avail the benefits of accessing the offset account and redraw based on the variable loan type.

Although dividing the split loan between the fixed and variable loan type is a personal decisions, the following points must be considered while making this decision:

• While you would want to avail the benefit of certainty in the interest rate and reduced impact of fluctuations in the interest rate, you must consider the flexibility of redraw facility and additional repayments.
• You must consider your financial and personal circumstances and their changeability in the next few years of the loan term.
• The timeframe for the fixed rate that you can commit to dedicatedly to avoid the penalties for breaking the rate term.