A split home loan divides your mortgage into two or more portions — typically one fixed rate portion and one variable rate portion. It is a practical middle ground for borrowers who want some certainty about repayments while retaining flexibility.
Your total loan is divided into separate loan splits, each with its own rate type and conditions. For example, on a $700,000 mortgage, you might fix $400,000 for 3 years and keep $300,000 on variable. Each split has its own account, its own repayment, and its own rules about extra repayments and offset.
The split is arranged at loan application or when refinancing. The ratio between fixed and variable is your choice — some lenders allow any split; others have minimums (e.g. at least $100,000 in each portion).
Offset accounts are typically only available on the variable rate portion of a split loan. This means if you have $400,000 fixed and $300,000 variable, your offset account reduces interest only on the $300,000. Many borrowers set their offset balance equal to or exceeding the variable portion to effectively reduce that portion's interest to zero while the fixed portion runs its course.
Extra repayments on the fixed portion are typically restricted (often capped at $10,000–$30,000/year). Exceeding this cap can trigger break costs. Extra repayments on the variable portion are usually unrestricted. This is why borrowers often direct surplus cash to the variable split (either directly or via the offset) while making minimum repayments on the fixed split.
There is no universal right answer. Consider:
When the fixed portion expires, it reverts to the lender's standard variable rate (the revert rate). This rate is often higher than the lender's advertised variable rate for new customers — it pays to negotiate or refinance the fixed portion before it reverts rather than accepting the revert rate passively.
How to use your offset on the variable portion of a split loan.
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