Split Home Loans.
Get the Best of Fixed and Variable Rates with One Home Loan
Choosing between a fixed and a variable rate is one of the biggest decisions in any home loan, and there’s no rule that says you have to pick just one. A split home loan divides your loan into two portions: one with a fixed rate for repayment certainty, and one with a variable rate for flexibility and features. You decide the ratio.
As an independent Melbourne mortgage broker, we compare split loan options across our lender panel, model different fixed-to-variable ratios against your budget, and structure the loan to match your goals.
What is a Split Home Loan?
A split home loan is a single home loan divided into two accounts with different interest rate types. A fixed rate applies to one portion, typically locked for one to five years, and a variable rate applies to the remainder. Each portion is charged interest at its own rate, and your total repayment is simply the two combined. You choose how the loan is divided: a 50/50 split is common, but 60/40, 70/30, or any ratio your lender allows can work. The fixed portion shields part of your loan from rate rises, while the variable portion keeps access to features like offset accounts, redraw, and unlimited extra repayments.
Why Split Your Home Loan?
Protection when rates rise
If interest rates go up, only the variable portion of your loan is affected. The fixed portion keeps the same repayment for its entire term, softening the impact on your monthly budget. The larger your fixed portion, the more structure you have.
Savings when rates fall
A fully fixed loan misses out when lenders cut rates. With a split, the variable portion benefits from every rate reduction that your lender passes on, so you’re never completely locked out of a falling market.
Keep offset, redraw, and extra repayments
Fixed loans typically cap extra repayments and rarely offer a full offset account. On the variable side of a split, you can usually make unlimited extra repayments, link an offset account to reduce the interest you pay, and redraw additional repayments if you need the funds back.
A structure you control
The split ratio is yours to set. Borrowers on a strict budget often fix the larger share for certainty. Borrowers with savings to offset or plans to repay aggressively often keep the larger share variable. We model and personalise each loan scenario with you before you commit so you’re confident in your financial decision.
Do you qualify Split Home Loan?
Split loans use the same lending criteria as standard home loans; the split is a structuring choice, not a separate product class. Here’s what lenders generally look for:
Your profile
- Stable income and employment history sufficient to service the full loan amount
- Clean credit history and a demonstrated record of meeting financial commitments
- Deposit of 10-20% of the purchase price; lenders’ mortgage insurance (LMI) generally applies below a 20% deposit
- Savings or equity to cover stamp duty, legal fees, and other purchase costs
The property
- A standard residential property: house, unit, townhouse, or apartment
- Owner-occupied or investment purposes; both can be structured as split loans
- Satisfactory lender valuation supporting the purchase price or refinance amount
The loan
- Minimum split amounts apply with some lenders, often around $10,000-$20,000 per portion
- Fixed terms typically range from one to five years on the fixed portion
- Principal-and-interest or interest-only repayments, subject to lender policy
- The split can be set at settlement or applied to an existing loan later, depending on the lender
How we Orange Home Loans Helps You
A split loan adds one more decision to an already big one: not just which lender, but how much to fix, for how long, and what that means for your repayments under different rate scenarios. Here’s why borrowers choose Orange Home Loans.
Compare split loan options across our panel
Fixed rates, variable rates, and split loan features vary widely between lenders, and the sharpest fixed rate doesn’t always come with the best variable product. We compare combinations across our lender panel to find the structure where both sides of your loan work hard.
Independent advice on your split ratio
We work for you, not the banks. That means honest modelling of how a 50/50, 60/40, or 80/20 split performs against your budget, your savings, and realistic rate scenarios, so the ratio you choose is a decision, not a guess.
Local Melbourne expertise
Based in Moonee Ponds and serving clients across Greater Melbourne, we offer face-to-face appointments on your schedule and stay with you beyond settlement, including when your fixed term matures and it’s time to review the structure.
SMSF loans:
Frequently asked questions.
Split Home Loans:
Frequently asked questions.
How does a split home loan work?
Your loan is divided into two accounts under one home loan contract. Interest is calculated separately on each portion at its own rate, and you make repayments covering both. For example, on a $600,000 loan split 60/40, $360,000 sits on a fixed rate with unchanging repayments, while $240,000 sits on a variable rate that moves with the market and carries the loan’s flexible features.
What is the best way to split a home loan?
There’s no universal best ratio; it depends on your priorities. A larger fixed portion suits borrowers who want maximum repayment certainty on a tight budget. A larger variable portion suits borrowers with significant savings to hold in an offset account or plans to make substantial extra repayments. We model different ratios against your circumstances before you decide.
Can I make extra repayments on a split home loan?
Yes, on the variable portion, which typically allows unlimited extra repayments without penalty. The fixed portion usually caps extra repayments, commonly at around $10,000 per year depending on the lender, with break costs possible if you exceed the cap. Many borrowers direct all extra repayments to the variable side for exactly this reason.
Can I have an offset account with a split loan?
Yes. An offset account can usually be linked to the variable portion of your split, reducing the interest charged on that side. Full offset accounts are rare on fixed loans, which is one of the main reasons borrowers split rather than fixing their entire loan.
What happens when the fixed term ends?
The fixed portion reverts to your lender’s standard variable rate unless you act. At that point you can re-fix that portion, let the whole loan run variable, set a new split ratio, or refinance to another lender entirely. We contact our clients before their fixed term matures so the decision is made on your terms, not by default.
Are there extra fees on a split home loan?
Some lenders charge account-keeping or establishment fees on each portion because a split effectively creates two loan accounts. Others include splits at no extra cost. Break costs can also apply if you exit the fixed portion early, such as when refinancing or selling. We factor all fees into the comparison so you see the true cost of each option.
Can I split my existing home loan?
With many lenders, yes. A split can be requested at settlement or applied to an existing loan later, subject to the lender’s policy and minimum split amounts. If your current lender doesn’t offer competitive split options, refinancing to one that does may be worth considering, and we can benchmark your loan against the market to find out.
Is a split home loan a good idea right now?
It depends on your situation and where rates head next, which nobody can predict with certainty. That uncertainty is precisely what a split addresses: you’re protected on the fixed portion if rates rise and still benefit on the variable portion if they fall. If you’d struggle with higher repayments, a larger fixed share adds security; if flexibility matters more, weight the split towards variable. We’ll talk through the trade-offs for your circumstances.
Does Orange Home Loans help with split loans in Melbourne?
Yes. We’re a Melbourne-based independent mortgage brokerage helping borrowers structure fixed, variable, and split home loans across Victoria. Based in Moonee Ponds and serving clients throughout Greater Melbourne, we offer consultations in person or at a time that suits you.