How a split home loan works

Fixed or variable? When it comes to your home loan, it’s a big question and it can be a tough decision. The good news is that you don’t have to decide. If you like the benefits that both fixed rate loans and variable rate loans provide, you can choose to split your home loan.

Splitting your home loan means that you divide your borrowings into fixed and variate rate portions. This gives you both the certainty of a fixed rate and the flexibility of a variable rate. The great part is, you get to choose how much of your loan you allocate to each portion.

Split home loan pros and cons

Split home loans appeal to borrowers who like to hedge their bets. Depending on your personal situation, splitting your borrowings into fixed and variable rate portions can give you certainty over a portion of your repayments that are fixed, while giving you the opportunity to benefit from a favourable market with the other portion of your home loan that is variable.

When it might make sense

Fixed Rate Home Loan

Variable Rate Home Loan
  • Certainty of the same rate for a set period
  • To help with budgeting
  • Concerned with changes to interest rates
  • No plans to make additional repayments off your loan
  • You want to pay one year interest in advance
  • Make additional repayments off your loan and have immediate access to the extra funds via redraw
  • You want to have an offset facility
  • Less concerned with changes to interest rates
  • Thinking of selling your property in the near future
Split your home loan

A split home loan in action

What benefits can a split loan really give you? The easiest way to find out is to put some numbers to it.

As an example, suppose you have a $450,000 home loan and you split this into two separate loan accounts, one being a $250,000 variable rate split and the other being a $200,000 three year fixed rate split.

  • The fixed rate split will have a rate locked in for three years with set repayments.
  • The variable rate split may change.

In this scenario, almost half of your loan is fixed, meaning you know exactly how much your monthly repayments will be, for three years. This reduces the variability you need to allow for in your budget.

On the other hand, you are able to make unlimited additional repayments into the variable rate split, access these additional repayments through redraw (if you need to) and access a mortgage offset account for all of BOQ’s variable rate home loans (apart from the Economy home loan).

Our popular fixed and variable home loans

Know what your repayments are for peace of mind

Fixed Rate Home Loan

A fixed rate home loan gives you the certainty of knowing exactly what your repayments will be for up to 5 years, while protecting yourself against any potential interest rate rises.

  • Owner occupier and investor options available
  • Great interest rates across our range of terms
  • Repayment options available include Principal and Interest repayments and Interest Only repayments

Our most popular low rate loan, packed with features

Clear Path Variable Home Loan

If you're looking for a fully featured, cheap home loan with a low rate, our Clear Path Variable Rate Home Loan is for you!

  • Owner occupier and investor options available
  • Mortgage offset
  • Unlimited free redraw and flexible repayments
Split your home loan

Split Loan Calculator

Use our split loan calculator to calculate your repayments based on fixed and variable terms.

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