Combination or split home loans give you the interest rate security of a fixed rate home loan with the flexibility of a variable rate home loan in one home loan, allowing you to save money over the term of your loan.
A combination or split home loan divides the total amount you’re borrowing between loan products, usually a fixed and variable interest rate home loan.
You may be able split your home loan into two or more portions and specify what percentage of your home loan is allocated to each product. The portions are assessed together as a single total for approval and serviceability, but each part is treated as a separate loan for documentation purposes.
Benefits of a combination or split loan
The advantage of combination or split rate home loans is that they allow you a great deal of flexibility in how you manage your loan: the fixed interest rate portion gives you the security of stable interest rates and repayment levels, while the standard variable interest rate portion allows you to take advantage of loan features such as additional repayments and redraw.
Combination or split home loans are particularly useful in a rising interest rate environment, because they allow you to hedge your bets and take advantage of the best of both products.