At PierPoint Lending, one of the most common questions we get is “should I fix or stay variable?” The good news is you can choose both! A split loan lets you put part of your mortgage on a fixed rate and part on a variable rate, so you’re not staking the whole loan on a single outcome. If you’ve been going back and forth trying to pick a side, a split structure might be the answer you’ve been looking for. 

What a Split Loan Actually Is 

A split loan is exactly what it sounds like: your total loan amount is divided into two separate accounts, each with its own rate type. If you borrow $600,000 and choose a 70/30 split, $420,000 sits on a fixed rate and $180,000 sits on a variable rate. You’ll typically get two separate loan statements, but they’re managed as one facility and secured against the same property. 

This is different from simply choosing fixed or variable for your entire loan. With a split, you’re not making an all-or-nothing decision. You’re deciding how much of your repayment certainty you want locked in, and how much flexibility you want to keep working for you. 

Why Borrowers Choose to Split Rather Than Commit Fully to One 

Most people who ask us about splitting are trying to solve the same underlying problem: they want some protection against rates rising, but they don’t want to give up everything a variable loan offers. Locking in 100 per cent of a loan removes flexibility. You generally can’t make unlimited extra repayments without a cap, you can’t use an offset account against the fixed portion, and if your circumstances change and you need to refinance or sell, break costs can apply. 

On the other hand, staying fully variable means your entire repayment is exposed if the Reserve Bank moves the cash rate, or if your lender simply decides to reprice. Splitting gives you a middle path. If rates rise, only the variable portion of your repayment increases. If rates fall, you still get some benefit through that same portion. Meanwhile, the fixed portion sits quietly in the background, doing exactly what you locked it in to do. 

We also see clients use a split loan deliberately around a life event. A young family expecting a change in income, for example, might fix a larger portion to protect their budget during parental leave, while keeping a smaller variable portion with an offset account attached for their everyday savings. 

How to Decide on a Split Ratio That Suits You 

There’s no single ratio that works for everyone, and we’d be doing you a disservice if we suggested otherwise. The right split depends on three things: how much certainty you need, how much you value features like offset and unlimited extra repayments, and how sensitive your budget is to a rate rise. 

A useful starting point is to work out your minimum comfortable repayment, the amount you could absolutely manage even in a worse-case scenario, and fix enough of your loan to cover that. The remainder, the part you could comfortably absorb if rates moved, is a reasonable candidate for the variable portion. This isn’t a formula we apply blindly. It’s a conversation, because your risk tolerance, income stability and savings habits all factor in differently. 

What to Watch Out For With a Split Loan 

Splitting isn’t without its own considerations. Break costs still apply to the fixed portion if you refinance, sell, or make repayments beyond the allowed cap during the fixed term. Offset accounts, where the real day-to-day flexibility lives, can generally only be attached to the variable portion, so think carefully about which portion of the loan you’d most want an offset working against. 

It’s also worth remembering that when your fixed term ends, that portion will roll onto a variable rate (or you can choose to fix it again), which means your split ratio effectively changes over time unless you actively manage it. 

Choosing between fixed and variable doesn’t have to be a guessing game, and for a lot of our clients, it isn’t actually a choice between the two at all. If you’d like to talk through whether a split loan makes sense for your situation, and what ratio might suit your budget and your goals, we’re happy to walk through it with you. Get in touch with PierPoint Lending and we’ll take it from there.  

Frequently Asked Questions

Can I change my split ratio later?

Not immediately, and not without cost. Once a fixed portion is locked in, you generally can’t move funds between the fixed and variable portions until the fixed term ends, unless you’re prepared to pay a break cost. At renewal, however, you can usually choose a new split ratio that better reflects your situation at the time. 

Do I pay break costs on the fixed portion if I refinance?

Potentially, yes. Break costs are calculated based on how much the lender’s funding costs have moved since you fixed, and how much time is left on the fixed term. They apply only to the fixed portion of a split loan, not the variable portion, which is one advantage of not fixing your entire loan in the first place. 

Can I have an offset account on a split loan?

Yes, but generally only against the variable portion. Most lenders don’t offer offset facilities on fixed-rate loans, so if having an offset account matters to you, it’s worth allocating a reasonable amount to the variable side rather than a token amount. 

Is a split loan more expensive than a single loan type?

Not inherently. You’re generally charged the standard fixed rate on the fixed portion and the standard variable rate on the variable portion, rather than paying a premium for splitting. Some lenders may apply a small structuring or account-keeping difference, which is worth checking, but it’s rarely significant enough to outweigh the benefit of the flexibility. 

What happens when the fixed portion’s term ends?

It will automatically roll onto that lender’s standard variable rate unless you arrange something else beforehand, which is often not the most competitive rate available. This is a good trigger point to review your whole loan, not just re-fix the same portion out of habit. 

Enquire Now

Complete the enquiry below and a member of the PierPoint Lending team will contact you to schedule a complimentary home loan review.