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Split Loan Calculator

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What is a Split Loan?

A split loan is a type of mortgage where your loan is divided into two portions: one with a fixed interest rate and the other with a variable interest rate. This arrangement allows you to enjoy the stability of a fixed rate while still benefiting from the flexibility and potential savings of a variable rate.

Fixed Portion: This part of the loan has a fixed interest rate for a set period (e.g., 3 years). This means your repayments won’t change during that period, providing stability and certainty, especially in a fluctuating interest rate environment.
Variable Portion: The interest rate for this part of the loan can change over time, often in line with changes to the official cash rate. This gives you flexibility, allowing you to make additional repayments without penalty and potentially benefit from falling interest rates.

How to Use the Split Loan Calculator

Step 1

Enter Your Loan Details

Loan Amount: Input the total loan amount you wish to borrow.
Fixed Portion: Specify the percentage of the loan you want on a fixed interest rate (e.g., 60%).
Fixed Period: Set the duration for which the fixed rate will apply (e.g., 3 years).
Fixed Interest Rate: Enter the interest rate for the fixed portion of the loan.
Variable Interest Rate: Input the current variable interest rate for the remaining portion of the loan.
Loan Term: Enter the total length of the loan, typically 15, 20, or 30 years.
Repayment Frequency: Select how often you make loan repayments (monthly, fortnightly, or weekly).

Step 2

View Your Results

Fixed Monthly Repayments: The monthly repayment amount for the fixed portion of the loan.
Variable Monthly Repayments: The monthly repayment amount for the variable portion of the loan.
Total Monthly Repayments: The total of both the fixed and variable repayments before and after the fixed period ends.
Total Interest Payable: The total interest you will pay over the life of the loan.
Comparison of Interest Payable: See how much interest you would pay if the entire loan were at the variable rate versus your split loan.

Explanations of Key Terms

Fixed Portion: The percentage of your loan that has a fixed interest rate, offering stable and predictable repayments.
Variable Portion: The portion of the loan that has a variable interest rate, which can change over time based on market conditions.
Fixed Period: The length of time during which the fixed interest rate applies. After this period, the loan may revert to the variable rate.
Fixed Interest Rate: The interest rate applied to the fixed portion of the loan, which doesn’t change for the duration of the fixed period.
Variable Interest Rate: The interest rate applied to the variable portion of the loan, which may fluctuate based on the official cash rate and other factors.
Total Monthly Repayments: The sum of your fixed and variable repayments each month.

FAQ

What is the benefit of splitting my loan?

Splitting your loan allows you to enjoy the stability of a fixed rate for part of the loan, while taking advantage of potential rate reductions and repayment flexibility on the variable portion.

Can I make additional repayments on my split loan?

Typically, you can make extra repayments on the variable portion without penalties. The fixed portion may have restrictions, depending on the lender’s terms.

What happens after the fixed period ends?

After the fixed period, the fixed portion of your loan will usually revert to the variable interest rate. You can refinance or renegotiate the terms with your lender if needed.

Is a split loan right for me?

A split loan is ideal if you want the security of fixed repayments but also want the flexibility to benefit from potential interest rate decreases and the ability to make extra repayments.

Can I change the split between fixed and variable rates during the loan term?

Most lenders require you to choose the split at the beginning of the loan. Changing it during the loan term may not be possible without refinancing.

Example Scenarios

Example 1

If you have a $250,000 loan with 60% on a fixed interest rate of 5.50% for 3 years and the remaining 40% on a variable rate of 5.50%, your fixed monthly repayment would be $851.68 and your variable monthly repayment would be $567.79. The total monthly repayment would be $1,419.47.

After the fixed period ends, your entire loan could revert to a variable rate, which may change depending on market conditions.

Disclaimer

Please note: The results provided by this calculator are estimates only and should be used for informational purposes. Always consult with a financial expert before making any decisions based on the results.

Interested in exploring the best of both worlds with a split loan?

Contact us today for personalised advice and see how splitting your home loan can offer you stability and flexibility in a fluctuating market.