The Pros and Cons of Choosing a Split Loan

Weighing up your options

When it comes to managing a home loan, borrowers are often faced with the choice between the certainty of fixed rates and the flexibility of variable rates. A split loan offers the best of both worlds by splitting your home loan into two or more loans. 

This approach can help balance stability with adaptability, giving homeowners the confidence of predictable repayments while still allowing them to take advantage of potential rate drops or make extra repayments without penalty.

Stability with potential for savings

Splitting your home loan across fixed and variable rates is a way to ‘have your cake and eat it too’.

The fixed portion provides certainty of repayments (which makes budgeting a breeze), and provides protection against possible future rate hikes during the fixed term you choose.

Meanwhile, the variable portion lets you save if interest rates fall.

Access to money-saving features

Splitting still lets you enjoy all the features and flexibility of the variable rate portion of your loan such as redraw or access to an offset account.

Better still, our fixed rate loans are also feature-packed.

You can still make extra payments on the fixed portion¹, helping to pay off the loan sooner, and have peace of mind knowing redraw is available.

So, splitting doesn’t have to mean missing out on money-saving features.

The freedom to pick your split to suit your needs

Choosing between a fixed or variable home loan can feel limiting but splitting your home loan opens up a number of choices. 

It enables you to divide your mortgage into portions to suit your needs—for example, 60% fixed and 40% variable, or another combination that works for your budget and goals. 

This flexibility extends to loan terms too, which can be different across each loan split – for example, if you want to pay one split off over a shorter term.

The flexibility to choose different fixed terms

A really exciting feature of Community First’s split loans is that you can select multiple splits and choose a different term for each split.

If, for example, you want to top up your home loan to complete renovations, or maybe buy a caravan to explore the open road, you can choose to pay it off over a different loan term via a split loan, while still paying off your main home loan within the original term.

Freedom to re-fix or go variable

It’s reassuring to know that you don’t have to stick with split rates for the entire term of your loan.

Fixed rates always apply for a set period. With Community First, you can choose to fix all or part of your home loan for one, two or three years.

When the fixed term you’ve selected comes to an end, the fixed part of your loan will revert to a variable rate. Or you can choose to fix for a further term.

Is a split loan right for you?

Split loans can be a handy solution for home buyers who are looking for some certainty around repayments but still with the benefit of flexible loan features.

To get a better idea of the type of loan that can help you achieve your property goals, call us on 1300 13 22 77, Mon-Fri 8am-8pm (AEST/AEDT) or 8am-3pm on Saturdays. Or pop in and speak to the friendly team at any of our stores.