In times of uncertainty, borrowers are sometimes baffled and cannot predict if the loan rates fluctuate up or down. So a convenient option is given to them by banks and financial institutions to put their minds to rest. They are offered what is known as a split rate loan.

Under this borrowing system, the customer can avail part of his loan at a fixed rate.

This would mean that whatever changes in the market and the fluctuations in the interest rates, it would have no impact on the repayment for this particular amount which you have borrowed under fixed rate. This is indeed a big boon especially when the rates are rising.

The Second part of the loan is taken as the variable rate which means the remaining loan amount after setting aside the amount for fixed rate, is used for this purpose.So if the rates go up the fixed rate would insulate you against that and if it goes down the lower rate will protects you anyway.

Hence Split Rate Loans lets you relax when market conditions are volatile. If you have budgeted your repayment then you can be tension free under the split rate loan. You can choose you Split Rate Loan in any combination. It can be 70% fixed and 30% variable or vice versa or any other combos. Choose the repayment fee in a flexible manner and make sure you can repay weekly, monthly or even every 15 days. Make sure that you minimum repayment does not exceed AUD $ 500, because if it does you need to make a fee on the fixed rate loan.

The Split rate loan can be looked as an investment loan too. Choose to repay the interest only on both the fixed and the variable rates.

The interest only repayments on a fixed rate home loan can be made monthly in arrears or annually in advance.  The way in which you take the split rate loan by splitting the amount between the variable and fixed rate will determine how you can save thousands of dollars. There are lot of banks who will advice you how to go about it. Most banks are so customer friendly that processing loans and advising on how you can save money is a department in itself and is handled by customer care.  If you are eligible processing of the loan is very simple and does not take much time.