Hedge your bets with a split loan

By the resi financial blog team, 27 February 2014

Split home loans

With the Reserve Bank of Australia indicating that the days of rate cuts are coming to an end, it’s a good time to reassess whether the home loan you have is still the best one for your situation.

When rates are expected to increase, many think about fixing their mortgage. Fixed rates are attractive because of the certainty they provide but you don’t benefit from any fall in rates and you’re generally locked in until the end of the term – the most common being three years.

Variable loans are much more flexible but if rates rise, then your home loan repayments will rise as well.

One way to benefit from the certainty of a fixed loan and the flexibility of a variable one is to take out a combination or split loan. This type of loan means if rates rise, then the fixed component of your mortgage will be protected against it. If rates fall again, then the variable part will enable you to take advantage of lower repayments.

Our FlexiFix Plus 80 product allows home owners to combine a fixed and variable offer and save. It offers a number of additional features that provide borrowers with greater flexibility, such as the ability to make up to $20,000 in additional repayments.

However, whatever type of loan you take out, remember to read the fine print and check the conditions. While you want to ensure your loan is competitive, you also want to make sure it’s the best one for you and your needs.

Categories: fixed loans, Home Loans, variable rates