Why choose one when you can have both? A split loan protects you from rate rises while keeping the flexibility to pay off your loan faster.
A split loan divides your home loan into two separate portions — one charged at a fixed rate and the other at a variable rate. You're essentially running two loans within a single mortgage, each with different features and benefits.
The fixed portion locks in your rate for a set period (usually 1–5 years), giving you predictable repayments and protection if interest rates rise. The variable portion moves with the market — meaning you benefit when rates drop, and you keep access to features like extra repayments, offset accounts, and redraw.
Think of it this way: the fixed portion is your "safety net" against rate rises, while the variable portion is your "accelerator" that lets you pay down your loan faster.
Many people assume a split loan means dividing your mortgage down the middle — 50% fixed, 50% variable. That's not how it works in practice.
The smart approach is to base your variable portion on how much extra you can realistically pay during the fixed period. Here's why:
The formula is simple:
Variable Portion = Extra Monthly Payment × Number of Months in Fixed Term
Let's say you have a $600,000 home loan and want to fix for 2 years. You can comfortably pay an extra $2,000 per month beyond your minimum repayments.
You want rate certainty for 2 years = 24 months
$2,000/month × 24 months = $48,000
Variable: ~$50,000–$60,000
Fixed: ~$540,000–$550,000
Here's exactly what you get from each side of your split loan — and why the combination is so powerful.
Your repayments stay the same no matter what happens to interest rates. If the RBA raises rates, your fixed portion is completely shielded. Perfect for budgeting and peace of mind.
Make unlimited extra repayments without break costs or penalties. Every extra dollar you put in reduces your interest immediately and helps you pay off your loan years earlier.
Your variable portion can be linked to an offset account. Money sitting in your everyday transaction account directly reduces the interest you pay — without locking funds away.
Extra payments on your variable portion can be redrawn if you need them later. This gives you a safety buffer while still reducing your interest in the meantime.
If rates fall, your variable portion drops too — so you get some relief even while your fixed portion stays locked. With a 100% fixed loan, you'd miss out entirely.
By fixing the bulk of your loan, you limit your exposure to rate increases. A 1% rate rise on $550,000 fixed costs you nothing — but on $550,000 variable, it adds ~$458/month.
See exactly how a split loan compares to going fully fixed or fully variable.
| Feature | 100% Fixed | 100% Variable | Split Loan ✨ |
|---|---|---|---|
| Rate rise protection | ✓ Full | ✗ None | ✓ On fixed portion |
| Benefit from rate drops | ✗ No | ✓ Full | ✓ On variable portion |
| Unlimited extra repayments | ✗ Capped or penalised | ✓ Yes | ✓ On variable portion |
| Offset account | ✗ Rarely available | ✓ Yes | ✓ On variable portion |
| Redraw facility | ✗ Limited | ✓ Yes | ✓ On variable portion |
| Budget certainty | ✓ Full | ✗ Fluctuates | ✓ Mostly (fixed is bulk) |
| Break costs if refinancing early | ✗ Yes, can be significant | ✓ No break costs | Only on fixed portion |
| Pay off loan faster | ✗ Difficult | ✓ Yes | ✓ Via variable portion |
A split loan is ideal if you want protection from rate rises but don't want to give up the flexibility to pay down your loan faster. It suits borrowers who:
Worried about rate increases on a tight budget. Fix most of the loan, keep a small variable for offset and extra repayments when possible.
Strong combined income with $3,000+ spare each month. Larger variable portion to accelerate payoff while still protecting against major rate hikes.
Want interest certainty for cash flow projections but need flexibility for tax-time adjustments and portfolio management.
Our brokers don't guess your split ratio — we calculate it based on your actual financial situation. Here's our process:
We look at your income, expenses, and determine how much extra you can comfortably pay each month beyond the minimum.
Based on where rates are heading and how long you want certainty — typically 1, 2, or 3 years.
Extra monthly capacity × fixed term months = your ideal variable amount. The rest goes fixed.
We find the most competitive fixed and variable rates across our panel — some lenders offer sharper rates on specific split structures.
We handle all the paperwork, negotiate with the lender, and get your split loan settled — often within 2–4 weeks.
A split loan is powerful — but it's important to understand the details before committing.
A split loan creates two separate loan accounts with separate repayments. Most lenders let you manage both through a single online banking portal, so it's not complicated in practice.
Some lenders charge a fee for splitting your loan, while many offer it at no extra cost. Your broker will compare options to find the most cost-effective structure.
If you need to refinance or pay off the fixed portion early, break costs may apply. These can be significant depending on how much rates have moved. The variable portion has no break costs.
When your fixed term ends, that portion typically rolls onto the lender's standard variable rate. At that point, you can re-fix, keep it variable, or refinance — your broker will guide you through the options.
Find out your estimated borrowing power in under 2 minutes — powered by real lender criteria from our panel of 30+ lenders.
Expert answers to the most common questions about split home loans.
Our brokers will calculate the perfect split ratio based on your budget and goals — comparing rates across 30+ lenders to find you the suitable option.
Join 353+ Five-Star Reviews • Obligation-free
📋 Explore More
We offer 25+ home loan and finance solutions for every situation, profession, and lending challenge.
Browse All Services →