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split home loan


What is a split home loan?

Choosing between a fixed interest rate and a variable rate can be tricky, but did you know you can get the best of both worlds? Keep scrolling to find out how.

What is a split home loan?

It’s where your home loan is (you guessed it) split into two parts, with one on a fixed interest rate and the other on a variable rate. Can’t remember the difference? Here’s a quick recap.

Fixed rate
: That’s where your home loan repayments stay the same for a set amount of time. Once the term is up, you can pick a new fixed rate or switch to a variable rate.

Variable rate: Your repayments might change depending on a bunch of factors including things like the official cash rate which is set by the money gurus at the Reserve Bank of Australia.

Then there’s a split loan, which is a combo of the two. It gives you the security of a fixed rate with the flexibility of a variable rate.

How does a split home loan work?

Say you took out a loan for $500,000 and split it 50:50. $250K would be under a fixed rate and the other half would have a variable rate. Simple, right?

Why would you split a home loan?

It could be a good option if you want the pros of both, or you’re on the fence.

The fixed rate part of your loan means:

  • You can make up to $20,000 in extra repayments during the fixed term without paying any break costs. Any more than this and you might be up for a fee.
  • If variable rates rise, your minimum mortgage repayments won’t change during the fixed interest rate period.
  • However, you won’t benefit from a drop in rates during the fixed term.
  • You won’t be able to redraw any additional repayments until the fixed term expires.

The variable rate part means you can:

  • Make extra repayments if your bank lets you (ahem... we do).
  • Redraw surplus funds if you’re up to date with your repayments and need the cash.
  • Still enjoy a dip in your repayments if rates are cut.
  • However, your minimum mortgage repayments will go up if interest rates rise.

The finer deets

You might be wondering - what’s the best way to split your home loan? There’s no magic number and it comes down to what you’re comfortable with. But before you decide, ask your bank:

  • If splitting your loan is possible (this one’s a biggie).
  • The number of times you can split.
  • If there are fees or a minimum split amount.

FYI: At UBank, our loans can be split up to four times with a minimum split of $20,000. Plus, splitting a home loan is fee-free!

If you just can’t decide between a fixed or variable rate, a split loan mortgage could be the winner. Check out our cracking rates, and if you like what you see, find out how to apply for a home loan here.


* UBank is a division of National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. Credit is provided by AFSH Nominees Pty Ltd ABN 51 143 937 437 Australian Credit Licence 391192. UBank is the mortgage manager for UHomeLoan products.

Terms and conditions, fees and charges, credit criteria apply to all UBank’s home loan products and are available on application.

The information contained in this article is of a general nature only. It doesn’t take account of any person’s objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate for your circumstances and seek independent legal, financial, and taxation advice.