Split loans: how much of your mortgage should you fix?

You want some certainty about the repayment without giving up all your room to pay extra or keep savings in an offset. A split loan lets you choose how much of the debt stays flexible.

Before choosing a ratio, list the cash you expect to hold, planned extra repayments and any likely sale or refinance during the fixed period. You don't need to fix half because 50/50 sounds balanced.

Each loan portion has its own rate and conditions. Ask how repayments are collected and allocated across them. Splitting doesn't divide property ownership or change a couple's legal responsibility for the debt.

Lenders offer different arrangements. With ANZ, you can choose a fixed and variable ratio, with flexible features on eligible variable lending. Some NAB arrangements can include multiple fixed or variable portions. This guide focuses on choosing the fixed and variable amounts.

You can ask about splitting an existing loan too. Eligibility, fees and existing fixed-rate restrictions depend on the product, so the change isn't automatically available on every loan.

Broker view: Work out how much cash you'll keep accessible and how much extra you can realistically repay during the fixed period. Include a planned lump sum when there's a sound basis for expecting it, rather than building the split around money you hope will arrive.

1. Choose the period you might fix for. Start with the cash you expect to keep in offset after known bills, moving costs or renovations. Keep an accessible emergency buffer; if it is already included in that cash balance, don't add it a second time.
2. Estimate what you can realistically add over that period after living costs and required loan repayments. Include dependable lump sums, not hoped-for bonuses. Decide which money stays accessible in offset and which becomes an extra loan repayment; count each dollar once.
3. Compare that plan with the projected variable-loan balance as it reduces. Allow for scheduled principal repayments too. Fixing too much can leave your offset larger than the loan it supports; fixing too little leaves more debt exposed to variable rates than you may want.
4. Ask us to price two or three dollar splits and test the repayments. Check the fixed portion's extra-payment cap, how its cap period is measured and any early-change costs before relying on it for surplus cash.

An offset is a linked account whose balance reduces the amount of the loan charged interest. Confirm which portion it can link to, whether it's a full offset and what the account costs.

Don't assume the fixed portion has the same offset access as the variable portion. Get the account link, offset percentage and fee in writing.

An offset's value comes from the money you hold in it. Savings above the linked loan balance don't create an unlimited interest saving. Use a realistic savings balance when comparing the benefit and cost.

You may want separate buckets for bills, holidays and emergencies without creating a new loan for each. Our multiple offset accounts guide explains the distinction and what to check. On the same eligible loan, the same total balance in full-offset accounts gives the same interest reduction whether it sits in one account or several.

Confirm each account is actually linked to the intended loan portion, including after a product change. Check ownership rules, fees and the total linked balance. Opening an account or giving it an 'offset' nickname does not prove the benefit is active.

On a $600,000 loan, fixing 60% means $360,000 has the chosen fixed rate and $240,000 remains variable.

Suppose you expect to hold $80,000 in offset and pay another $40,000 towards the debt. Ask whether the variable portion leaves enough room for that plan. Test other ratios too, rather than assuming 60/40 or 50/50 is the right answer.

For a hypothetical two-year plan, suppose that $80,000 includes a $20,000 emergency buffer and the $40,000 is additional money, not the same savings counted again. Ignoring scheduled principal repayments for this illustration, paying $40,000 into the $240,000 variable loan leaves $200,000; the $80,000 full offset then leaves $120,000 charged interest on that portion.

If only $100,000 had been left variable, the same extra payment would reduce it to $60,000. An $80,000 offset would then exceed that linked balance by $20,000, with no extra offset benefit on the excess. This assumes no offset on the fixed portion. Actual balances and timing matter; neither split is a recommendation.

With no offset or extra payments, a 1 percentage point rate change on the original $240,000 variable portion changes annual interest by roughly $2,400, or $200 a month, on a constant balance.

That's a simplified interest sensitivity, not a principal and interest repayment quote. The fixed $360,000 isn't affected by that variable-rate change during its fixed period.

A fixed rate protects that portion from a rate rise during the agreed period. If variable rates fall, the fixed portion doesn't follow them down.

It can also cost you to change the fixed loan early. A break cost is a charge the lender may apply when you repay or change a fixed loan before its term ends.

Extra repayments may have limits too. Having a variable portion doesn't remove those restrictions from the fixed one.

If you might sell and upgrade in 2 years, think carefully before fixing for longer. Ask what happens if you pay a lump sum, change the ratio or refinance the whole loan before expiry.

Our fixed rate home loan guide covers break costs, fixed periods and expiry. Put those restrictions alongside the payment certainty you want, rather than treating a split as a guarantee of the cheapest loan.

CommBank's fixed loan has no Everyday Offset during the fixed period. It allows up to $10k extra in each fixed year without its Early Repayment Adjustment and Administrative Fee, excluding interest-in-advance terms. The year starts when the fixed term begins, and those extra payments cannot be redrawn during the fixed period. Our Commonwealth Bank home loan review covers the wider options.

Bendigo offers a 100% offset on eligible fixed and variable products, subject to the product and fees. If you want to fix more of the loan while keeping savings accessible, compare that with a variable-offset split. The linked account, rate and fees still matter; an offset does not remove break costs or extra-payment restrictions.

Macquarie requires at least a $20k limit for each split. Fixing all of an Offset Home Loan first requires a switch to its Basic Home Loan. Fixed rates are unavailable for company and trust loans and some other loan types, so we'll check the facility before recommending a ratio. Our Macquarie home loan review has the product conditions.

NAB's app handles an eligible fixed-and-variable split. If you want multiple fixed or variable portions, such as fixed parts ending in different years, discuss that separately with the bank. Our NAB home loan review covers the features.

Book a free assessment with your savings balance, expected extra payments and likely moving date. We'll compare split amounts and extra-repayment restrictions around that plan, rather than choosing on the advertised fixed rate alone.

Ask for separate calculations using each balance, its quoted rate and the remaining loan term, then add the payments together. Model the variable portion at higher and lower rates with Moneysmart's repayment calculator. During the fixed period, don't apply a variable-rate change to the whole debt.

Compare the rate, comparison rate and fees for each quoted portion. A comparison rate combines interest and most fees under set assumptions. It isn't a personalised combined rate for your split, so ask for the dollar cost using your balances and terms as well.

Put the expiry date in your calendar. Before it arrives, ask what rate the fixed part will revert to, including any agreed discount. Compare fixing again with making the loan fully variable.

Check both portions when changing either one. Fees, package conditions and account links can affect the whole loan.

Don't assume the accounts merge when the fixed rate ends. A rate reversion and combining loan accounts are different changes. You may be left with two variable accounts, different rates and an offset still linked to the smaller one.

Before asking to merge them, work out the problem you want to solve. If the offset exceeds one balance, ask whether it can be linked to another eligible portion instead. If you just want one repayment or fewer accounts, compare the benefit with the work and cost of changing.

Ask the lender whether this is a simple variation or needs an internal refinance/new application, updated income evidence, valuation or credit assessment. Confirm any fees, remaining term, repayment changes and security arrangements. Don't assume approval, a fee waiver or a set processing time.

Where loans have different purposes or relate to different properties, get advice before combining them. Keep records showing how each amount was used; a tidier account screen does not remove tax-tracing issues. Your accountant should check any investment or private-use mix.

Ask our Brisbane mortgage broking team to compare ratios using your savings, planned extra payments and likely moving date. Check each part's rate, fees and expiry terms before choosing. Call Hunter Galloway on 1300 088 065 or request a free assessment.