Split Rate Home Loan

For a split rate home loan, a borrower can enjoy the features of both the fixed rate and variable rate loans. This set-up makes you enjoy the advantages of both loans in a single loan deal. Borrowers can even control the split of the loan between the fixed and variable rate terms. They can have it 60% variable, 40% fixed, 70% variable, 30 fixed or have an equal 50/50 split home loan deal.

In times of fluctuating market rates, a split rate home loan is beneficial especially when prices are on the rise. Because of a split rate home loan, a borrower is safe against interest rate increases while maintaining the normal rates of the loan.
Borrowers who would like to buy a new residence or purchase a property as an investment can avail of a split home loan. You also have the freedom to change the loan’s specifications according to your financial capabilities. Most of the time, borrowers arrange a 50/50 set-up to equally experience the advantages of both the fixed rate and variable rate loan.

Because part of the loan is under the fixed rate type, you might get penalties if you make extra repayments to speed up the completion of the loan term. You might also be tagged with set-up fees, account fees and discharge fees from both the variable rate and fixed rate portions of the split loan. Also, your monthly repayment may change from time to time due to the variable rate part of the loan.
Yet with the fixed rate part of the deal, you are safe against price hikes in the interest rate. The variable rate feature of the split loan also gives you the possibility of having lower repayments if interest rates drop. To get a clear picture of a split home loan, you must review its terms and conditions and you might even unravel features which you thought are not available.