A split home loan divides one loan into two or more parts, usually one at a fixed rate and one variable. The fixed part gives certainty over its repayments; the variable part keeps an offset account, free extra repayments and redraw. Splits are also used to keep borrowing for different purposes apart, such as a home and an investment, which keeps tax records clean.

Split loans at a glance
Part Good for Watch for
Fixed portion Repayment certainty for the fixed term Break costs if repaid early; limited extra repayments
Variable portion Offset, extra repayments, redraw Rate can rise or fall
Purpose splits Separating home, investment or business borrowing More accounts to manage

How do you choose the split?

Many borrowers put the amount they want certainty on into the fixed part, and the amount they expect to repay faster, or to offset with savings, into the variable part. A worked example: a $700,000 loan split 60/40. The $420,000 fixed part at an illustrative 5.8% costs about $2,464 a month over 30 years; the $280,000 variable part at the 6% example rate costs about $1,679, and savings in an offset account reduce the interest on that part only.

If you plan to sell within the fixed term, keep the fixed part smaller, because a break cost applies to it; see fixed rate break costs.

Does an offset account work on a split loan?

Usually only on the variable part, and the offset can only reduce interest on the part it is linked to. If your savings are larger than the variable portion, the extra does nothing. The guide to offset accounts and the offset calculator show the saving.

Why split by purpose?

Interest deductibility follows what the borrowed money was used for. If one loan funds both your home and an investment, every repayment mixes deductible and non-deductible debt. Separate splits keep it clear, which is why investors often hold an investment split, a home split and sometimes a debt recycling split. See debt recycling and refinancing an investment property.

What are the downsides?

  • More than one account and repayment to track.
  • The fixed part has the usual fixed-rate limits.
  • Some lenders charge a fee per split or limit the number of splits.

Questions people ask

Is a split home loan a good idea?

It suits borrowers who want some certainty without losing offset and extra repayments. If you want neither, one loan is simpler.

Can I change the split later?

Usually when a fixed term ends, or by refinancing. Changing a fixed part early can trigger a break cost.

Can I have an offset on both parts?

Rarely; most lenders link offset only to variable parts.

Charles Touma works out a split that matches your savings, plans and any investment use, then compares lenders on how they handle splits and offsets. A free 30-minute call covers the structure. General information only, not tax or credit advice; ask your tax agent about deductions.

Sources: ATO, interest expenses on rental property; Moneysmart, home loans, checked 20 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.