A split home loan — sometimes called a split facility or split mortgage — is a single loan divided into a fixed-rate portion and a variable-rate portion, each with its own rate and its own features. It is not two loans, despite how it is often described. It is one loan package, structured in two parts, so that different parts of your debt behave differently as the cash rate moves.
The point of splitting is not to predict where rates are going. It is to stop having to. The fixed portion gives you a known repayment on part of the balance, insulated from a rate rise. The variable portion keeps the flexibility — extra repayments, an offset account, the ability to benefit if rates fall. You are not betting the whole loan on one direction; you are deciding how much certainty you want and how much flexibility you are willing to keep.
How a split is structured
The split ratio is yours to set: 50/50, 80/20, 70/30 — whatever balance of certainty and flexibility suits your position. There is no correct ratio in the abstract. It depends on how exposed you are to a repayment increase, how much you expect to pay down in the fixed period, and how much you value being able to react. Most lenders let you divide a loan into several portions, often up to four, usually with a minimum amount per split (commonly around $20,000, though this varies by lender).
A few mechanics worth holding in mind. The fixed portion locks a rate for a set term, which is exactly why it protects you on the way up — and exactly why it costs you on the way down. If rates fall, only the variable portion benefits. And if your circumstances change inside the fixed term — you sell, you refinance, or rates drop far enough to justify moving — the fixed portion can attract a break cost, which in some cases is substantial. Splitting also adds a layer of admin: more accounts, potentially more establishment and ongoing fees, and more moving parts at application time. None of this makes a split wrong. It makes it a structure to choose deliberately rather than by default.
Where a split earns its keep
The variable side carries the features most people actually use day to day: offset, redraw, unlimited extra repayments. The fixed side carries the predictability. A well-set split lets you direct savings and surplus income at the variable portion through an offset, reducing interest there, while the fixed portion holds your baseline repayment steady. That combination is the real argument for splitting — not the gamble on rates, but the ability to run an aggressive repayment strategy on one part of the loan while protecting the other.
The trade-off sits in the fixed portion's rigidity. Break costs are the line item that surprises people, and they are worth modelling before you commit, not after. Whether a split serves you comes down to your cash flow, your repayment plans, and how the specific lender's fixed terms and break methodology are written — which is a policy question that differs from lender to lender.
Guarantors and a split loan
A split structure does not prevent a guarantor arrangement. With a guarantor, many lenders will lend up to 100% of the property's value — and in some cases up to 105% to cover costs such as stamp duty — and may waive Lenders Mortgage Insurance (LMI), though neither outcome is automatic. As with everything in lending, it depends on the lender's policy and your full circumstances. The guarantee can sit over a split loan in the same way it sits over a standard one; the question is which lender's policy accommodates both at once.
A split is a structural decision, not a tactical one. The ratio, the fixed term, the break exposure and the lender all need to line up with how you actually plan to use the loan over the next few years. That is worth mapping properly rather than splitting by reflex.
Book a strategy session and we will work through the structure that fits your position.
General information only — not personal financial product or credit advice. Lending is subject to each lender's policy, your full circumstances and responsible-lending assessment. Fixed-rate break costs and the suitability of any split structure should be confirmed for your specific circumstances. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).